<PAGE> 1

                    U.S. SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                  FORM 10-QSB


(Mark One)

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

            For the quarterly period ended   September 30, 1996
                                           -------------------------------------

                                      OR
/   /   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 small business issuer as specified in its charter)

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

            212 SOUTH CENTRAL, SUITE 100; ST. LOUIS, MISSOURI  63105
            --------------------------------------------------------------------
            (Address of principal executive offices)

            (314) 512-8650
            --------------------------------------------------------------------
            (Issuer's telephone number)


            --------------------------------------------------------------------
            (Former Name, Former Address and Former Fiscal Year, if changed
            since last report)


      Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes   X   No      .
                       -----    -----

      State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:  As of August 12, 1996
there were 3,317,555 shares of the Registrant's common stock outstanding.

      Transitional Small Business Disclosure Format (Check one):
            Yes       No   X
                -----    -----

                                    -1-
<PAGE> 2

<TABLE>
                             PGI INCORPORATED AND SUBSIDIARIES
                                        FORM 10-QSB
                          For the Quarter Ended September 30, 1996

                                     Table of Contents

                                   ---------------------

<CAPTION>
                                                                               Form 10-QSB
                                                                                 Page No.
                                                                               -----------
<S>                                                                            <C>
PART I        Financial Information

     Item 1       Financial Statements
                  Consolidated Statements of Financial Position
                    September 30, 1996 and December 31, 1995                        3
                  Consolidated Statements of Operations
                    Three & Nine Months Ended September 30, 1996 and 1995           4
                  Condensed Consolidated Statements of Cash Flows
                    Nine Months Ended September 30, 1996 and 1995                   5
                  Notes to Consolidated Financial Statements
                    for Form 10-QSB                                               6 - 11

     Item 2       Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                          12 - 15


PART II       Other Information

     Item 1       Legal Proceedings                                                16
     Item 2       Changes in Securities                                            16
     Item 3       Defaults Upon Senior Securities                                  16
     Item 4       Submission of Matters to a Vote of Security Holders              16
     Item 5       Other Information                                                16
     Item 6       Exhibits and Reports on Form 8-K                               18 - 20

SIGNATURES                                                                         17

</TABLE>

                                    -2-
<PAGE> 3

                               PGI INCORPORATED AND SUBSIDIARIES


PART I      Financial Information

    Item 1  Financial Statements
<TABLE>
                         CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                        ($ in thousands)
<CAPTION>
                                                              Sept. 30,              December 31,
                                                                1996                     1995
                                                             -----------             ------------
                                                             (unaudited)
<S>                                                          <C>                     <C>
ASSETS
 Cash, including restricted cash of $1,114,000
       and $1,102,000                                        $     1,123             $      1,165
   Receivables on real estate sales - net                            341                      682
   Other receivables                                                  17                       11
   Land and improvement inventories                                9,020                    9,031
   Property and equipment - net                                       54                       81
   Other assets                                                      752                      766
                                                             -----------             ------------
                                                             $    11,307             $     11,736
                                                             ===========             ============

LIABILITIES
   Accounts payable                                          $       108             $         91
   Other liabilities                                               1,525                    1,143
   Accrued interest:
       Primary lender                                              2,214                    1,541
       Debentures                                                  6,557                    5,628
       Other                                                       1,407                    1,302
   Credit agreements -
       Primary lender                                              7,283                    7,287
   Notes and mortgages payable                                     3,613                    3,802
   Convertible subordinated
       debentures payable                                          9,059                    9,059
   Convertible debentures payable                                  1,500                    1,500
                                                             -----------             ------------

                                                                  33,266                   31,353
                                                             -----------             ------------
   Commitments and contingencies

STOCKHOLDERS' EQUITY
   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                    2,000
   Common stock, par value $.10 per share;
       authorized 25,000,000 shares; 3,317,555 shares
       issued and outstanding                                        332                      332
   Paid in capital                                                13,698                   13,698
   Accumulated deficit                                           (37,989)                 (35,647)
                                                             -----------             ------------

                                                                (21,959)                  (19,617)
                                                             -----------             ------------

                                                             $    11,307             $     11,736
                                                             ===========             ============


          See accompanying notes to consolidated financial statements for Form 10-QSB.

</TABLE>

                                    -3-
<PAGE> 4


                               PGI INCORPORATED AND SUBSIDIARIES


PART I      Financial Information (Continued)

<TABLE>
                                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                               ($ in thousands)
                                                 (Unaudited)
<CAPTION>
                                                 Three Months Ended                   Nine Months Ended
                                             ---------------------------         ---------------------------
                                             Sept. 30,         Sept. 30,         Sept. 30,         Sept. 30,
                                                1996              1995              1996              1995
                                             ---------         ---------         ---------         ---------
<S>                                          <C>               <C>               <C>               <C>
REVENUES
   Real estate sales                         $       -         $       -         $       -         $      15
   Interest income                                  19                37                73               136
   Other income                                    219               112               388               564
                                             ---------         ---------         ---------         ---------
                                                   238               149               461               715
                                             ---------         ---------         ---------         ---------
COSTS AND EXPENSES
   Cost of real estate sales                         -                 -                 -                11
   Selling expenses                                  1                 7                10                32
   General & administrative expenses               162               167               654               495
   Interest                                        646               575             1,857             1,796
   Other expenses                                  109                83               282               293
                                             ---------         ---------         ---------         ---------
                                                   918               832             2,803             2,627
                                             ---------         ---------         ---------         ---------
NET INCOME (LOSS)                            $    (680)        $    (683)        $  (2,342)        $  (1,912)
                                             =========         =========         =========         =========
NET INCOME (LOSS) PER SHARE<F*>
   Primary and fully diluted                 $    (.25)        $    (.25)        $    (.85)        $    (.72)
                                             =========         =========         =========         =========
<FN>

<F*>  Considers the effect of cumulative preferred dividends in arrears for
      the three and nine months ended September 30, 1996 and 1995.







See accompanying notes to consolidated financial statements for form 10-QSB.

</TABLE>


                                    -4-
<PAGE> 5



                               PGI INCORPORATED AND SUBSIDIARIES


PART I      Financial Information (Continued)

<TABLE>

                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               ($ in thousands)
                                                 (Unaudited)
<CAPTION>
                                                                       Nine Months Ended
                                                               ---------------------------------
                                                               Sept. 30,               Sept. 30,
                                                                 1996                    1995
                                                               ---------               ---------
<S>                                                            <C>                     <C>
Net cash provided by operating activities                      $     148               $     319
                                                               ---------               ---------

Cash flows from investing activities:
   Proceed from fixed asset sales                                      -                       1
   Purchase of property and equipment                                  -                       -
                                                               ---------               ---------
   Net cash used in investing activities                               -                       1
                                                               ---------               ---------

Cash flows from financing activities:
   Proceeds from borrowings                                          150                       -
   Principal payments on debt                                       (340)                   (398)
                                                               ---------               ---------
   Net cash used in financial activities                            (190)                   (398)
                                                               ---------               ---------

Net decrease in cash                                                 (42)                    (78)

Cash at beginning of period                                        1,165                   1,261
                                                               ---------               ---------

Cash at end of period                                          $   1,123               $   1,183
                                                               =========               =========








See accompanying notes to consolidated financial statements for form 10-QSB.

</TABLE>


                                    -5-
<PAGE> 6


                    PGI INCORPORATED AND SUBSIDIARIES

                Notes to Consolidated Financial Statements

(1)   Basis of Presentation

      The accompanying unaudited consolidated financial statements have
      been prepared in accordance with the instructions to Form 10-QSB
      and therefore do not include all disclosures necessary for fair
      presentation of financial position, results of operations and cash
      flows in conformity with generally accepted accounting principles.
      The Company's independent accountants included an explanatory
      paragraph regarding the Company's ability to continue as a going
      concern in their opinion on the Company's consolidated financial
      statements for the year ended December 31, 1995.

      The Company continues, however, to remain in default under the
      indentures governing its convertible unsecured subordinated
      debentures (the "Indentures") (See Management's Discussion and
      Analysis of Financial Condition and Results of Operations).
      However, as more fully discussed in Note 10 to the Company's
      consolidated financial statements for the year ended December 31,
      1995, as contained in the Company's Annual Report on Form 10-KSB,
      the Company's management is seeking purchasers for its remaining
      undeveloped land.

      The financial statements do not include any adjustments relating to
      the recoverability of recorded asset amounts or the amounts of
      liabilities that might be necessary should the Company be
      unsuccessful in its sales efforts.

      In the opinion of management, subject to the effects on the
      Company's unaudited consolidated financial statements of such
      adjustments, if any, as might have been required had the outcome of
      the matters discussed in the preceding paragraph been known, all
      other adjustments (consisting of only normal recurring accruals)
      necessary for fair presentation of financial position, results of
      operations and cash flows have been made.  The results for the three
      and nine months ended September 30, 1996 are not necessarily
      indicative of operations to be expected for the fiscal year ending
      December 31, 1996 or any other interim period.

(2)   Recognition of Real Estate Sales

      The Company has adopted the installment method of profit
      recognition for all homesite sales effective January 1, 1990 and
      thereafter.  For sales consummated prior to January 1, 1990, the
      Company recognized profit under the full accrual or
      percentage-of-completion methods as appropriate.  The full accrual
      method recognizes the entire profit when minimum down payments and
      other requirements are met.  Under the percentage-of-completion
      method, profit is recognized by the relationship of costs incurred
      to total estimated costs to be incurred.  The installment method
      recognizes gross profit as down payments and principal payments on
      contracts are received.



                                    -6-
<PAGE> 7

                    PGI INCORPORATED AND SUBSIDIARIES

          Notes to Consolidated Financial Statements (continued)

(3)   Per Share Data

      Primary per share amounts are computed by dividing net income
      (loss), after considering additional accumulation of dividends in
      arrears on the Company's preferred stock, by the average number
      of common shares and common stock equivalents outstanding.  For
      this purpose, the Company's cumulative convertible preferred
      stock, convertible subordinated debentures and collateralized
      convertible debentures are not deemed to be common stock
      equivalents, but outstanding vested stock options are considered
      as such.  However, under the treasury stock method, no vested
      stock options were assumed to be exercised, and therefore no
      common stock equivalents existed, for the calculation of primary
      per share amounts for the nine months ended September 30, 1996 and
      1995.  The average number of common shares outstanding for the
      nine months ended September 30, 1996 and 1995 was 3,317,555,
      respectively.

      Fully diluted per share amounts are computed by dividing net
      income (loss) by the average number of common shares outstanding,
      after adjusting both for the estimated effects of the assumed
      exercise of stock options and the assumed conversion of all
      cumulative convertible preferred stock, convertible subordinated
      debentures and collateralized convertible debentures into shares
      of common stock.  For the nine months ended September 30, 1996 and
      1995, no stock options were assumed to be exercised and the effect
      of the assumed exercise of stock options and the assumed
      conversion of all cumulative convertible preferred stock,
      convertible subordinated debentures and collateralized convertible
      debentures would have been anti-dilutive.

(4)   Statement of Cash Flows

      The Financial Accounting Standards Board issued Statement No. 95,
      "Statement of Cash Flows", which requires a statement of cash
      flows as part of a full set of financial statements.  For
      quarterly reporting purposes, the Company has elected to condense
      the reporting of its net cash flows.  Interest paid for the nine
      months ended September  30, 1996 and 1995 was $149,000 and
      $193,000, respectively.

      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.

(5)   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 homesite and housing contracts.



                                    -7-
<PAGE> 8

                    PGI INCORPORATED AND SUBSIDIARIES

          Notes to Consolidated Financial Statements (continued)

(6)   Receivables on Real Estate Sales

      Net receivables on real estate sales consisted of:

<TABLE>
<CAPTION>
                                                               Sept. 30,                        December 31,
                                                                 1996                               1995
                                                               ---------                        ------------
                                                                              ($ in thousands)
<S>                                                            <C>                              <C>
   Contracts receivable on homesite sales                      $   1,172                        $      1,599
   Other                                                              98                                 128
                                                               ---------                        ------------
                                                                   1,270                               1,727
   Less:  Allowance for cancellations                               (876)                               (976)
          Unamortized valuation discount                             (53)                                (69)
                                                               ---------                        ------------
                                                               $     341                        $        682
                                                               =========                        ============
</TABLE>

(7)   Land and Improvements

      Land and improvement inventories consisted of:

<TABLE>
<CAPTION>
                                                               Sept. 30,                        December 31,
                                                                 1996                               1995
                                                               ---------                        ------------
                                                                              ($ in thousands)
<S>                                                            <C>                              <C>
   Unimproved land                                             $   8,724                        $      8,724
   Fully improved land                                               296                                 307
                                                               ---------                        ------------
                                                               $   9,020                        $      9,031
                                                               =========                        ============
</TABLE>

(8)   Property and Equipment

      Property and equipment consisted of:

<TABLE>
<CAPTION>
                                                               Sept. 30,                        December 31,
                                                                 1996                               1995
                                                               ---------                        ------------
                                                                              ($ in thousands)
<S>                                                            <C>                              <C>
   Furniture, fixtures and other equipment                     $     364                        $        405
   Less:  Accumulated depreciation                                  (310)                               (324)
                                                               ---------                        ------------
                                                               $      54                        $         81
                                                               =========                        ============
</TABLE>

(9)   Other Assets

      Other assets consisted of:

<TABLE>
<CAPTION>
                                                               Sept. 30,                        December 31,
                                                                 1996                               1995
                                                               ---------                        ------------
                                                                              ($ in thousands)
<S>                                                            <C>                              <C>
   Guaranteed future connections related to
        sale of utility plants and equipment, net              $     621                        $        621
   Prepaid loan and debenture costs                                    -                                  13
   Deposit with Trustee of 6-1/2% debentures                         124                                 120
   Other                                                               7                                  12
                                                               ---------                        ------------
                                                               $     752                        $        766
                                                               =========                        ============
</TABLE>


                                    -8-
<PAGE> 9

                    PGI INCORPORATED AND SUBSIDIARIES

          Notes to Consolidated Financial Statements (continued)

(10)  Other Liabilities

      Other Liabilities consisted of:

<TABLE>
<CAPTION>
                                                               Sept. 30,                        December 31,
                                                                 1996                               1995
                                                               ---------                        ------------
                                                                              ($ in thousands)
<S>                                                            <C>                              <C>
   Accrued property taxes
        - current                                              $     156                        $         37
        - delinquent                                                 479                                 249
   Other accrued expenses                                            283                                 243
   Deposits, advances and escrows                                    337                                 346
   Estimated recourse liability for
        receivables sold                                             252                                 252
   Other                                                              18                                  16
                                                               ---------                        ------------
                                                               $   1,525                        $      1,143
                                                               =========                        ============

</TABLE>

(11)   Primary Lender Credit Agreements, Notes and Mortgages Payable
       and Convertible Subordinated Debentures Payable

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

<TABLE>
<CAPTION>
                                                               Sept. 30,                        December 31,
                                                                 1996                               1995
                                                               ---------                        ------------
                                                                              ($ in thousands)
<S>                                                            <C>                              <C>
   Credit agreements - primary lender:
        maturing July 8, 1997, bearing interest
          at prime plus 5%:                                    $   7,283                        $      7,287
                                                               ---------                        ------------
   Notes and mortgages payable - $1,447,000
        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 2000                        3,613                               3,802
                                                               ---------                        ------------

   Convertible subordinated debentures payable:

   At 6-1/2% interest; due June 1991; convertible
     into shares of common stock at
     $18.00 per share                                          $   1,034                        $      1,034
   At 6% interest; due May 1, 1992; convertible
     into shares of common stock at
     $19.50 per share                                              8,025                               8,025
                                                               ---------                        ------------
                                                               $   9,059                        $      9,059
                                                               ---------                        ------------

   Collateralized convertible debentures payable:

   At 14% interest; due July 8, 1997, convertible
     into share of common stock at
     $1.72 per share                                               1,500                               1,500
                                                               ---------                        ------------
                                                               $  21,455                        $     21,648
                                                               =========                        ============
</TABLE>


                                    -9-
<PAGE> 10

                    PGI INCORPORATED AND SUBSIDIARIES

          Notes to Consolidated Financial Statements (continued)

(12)   Real Estate Sales and Other Income

       Real estate sales and cost of sales for the three and nine
       months ended September 30, 1996 and 1995 consisted of:

<TABLE>
<CAPTION>
                                           Three Months Ended                   Nine Months Ended
                                       ---------------------------         ---------------------------
                                       Sept. 30,         Sept. 30,         Sept. 30,         Sept. 30,
                                         1996              1995              1996              1995
                                       ---------         ---------         ---------         ---------
                                             ($ in thousands)                    ($ in thousands)
<S>                                    <C>               <C>               <C>               <C>
   Revenues:
         Homesite sales                $       -         $       -         $       -         $      15
         Home sales                            -                 -                 -                 -
         Acreage sales                         -                 -                 -                 -
                                       ---------         ---------         ---------         ---------
                                       $       -         $       -         $       -         $      15
                                       =========         =========         =========         =========
   Cost of Sales:
         Homesite sales                $       -         $       -         $       -         $      11
         Home sales                            -                 -                 -                 -
         Acreage sales                         -                 -                 -                 -
                                       ---------         ---------         ---------         ---------
                                       $       -         $       -         $       -         $      11
                                       =========         =========         =========         =========
</TABLE>

       Other income for the three and nine months ended September 30,
       1996 and 1995 consisted of:

<TABLE>
<CAPTION>
                                           Three Months Ended                   Nine Months Ended
                                       ---------------------------         ---------------------------
                                       Sept. 30,         Sept. 30,         Sept. 30,         Sept. 30,
                                         1996              1995              1996              1995
                                       ---------         ---------         ---------         ---------
                                             ($ in thousands)                    ($ in thousands)
<S>                                    <C>               <C>               <C>               <C>
   Commission income                   $     107         $      54         $     245         $     212
   Installment sale income                     -                53                 -               151
   Other income                              112                 5               143               201
                                       ---------         ---------         ---------         ---------
                                       $     219         $     112         $     388         $     564
                                       =========         =========         =========         =========
</TABLE>

(13)   Commitments and Contingencies

       The aggregate outstanding balances of all receivables sold and
       exchanged with recourse totaled $276,000 and $384,000 at September
       30, 1996 and December 31, 1995, respectively.  Based on its
       collection experience with such receivables, the Company
       maintained allowances at both September 30, 1996 and December 31,
       1995, classified in other liabilities, of $252,000 for the
       recourse provisions related to all receivables sold.

(14)   Income Taxes

       Effective January 1, 1993 the Company adopted Statement of
       Financial Accounting Standards (SFAS) No. 109, "Accounting for
       Income Taxes," which requires a change from the deferred method
       to the asset and liability method of accounting for income taxes.
       Under the asset and liability method, deferred income taxes are
       recognized for the tax consequences of "temporary differences" by
       applying enacted statutory tax rates applicable to future years
       to differences between the financial statement carrying amounts
       and the tax bases of existing assets and liabilities.  Under SFAS
       No. 109, the effect on deferred taxes of a change in tax rates is
       recognized in income in the period that includes the enactment
       date.  Under the deferred method, deferred taxes were recognized
       using the tax rate applicable to the year of the

                                   -10-
<PAGE> 11

                    PGI INCORPORATED AND SUBSIDIARIES

          Notes to Consolidated Financial Statements (continued)


       calculation and were not adjusted for subsequent changes in tax
       rates.  Based on the Company's current tax status and current tax
       laws, adoption of SFAS No. 109 did not have a material effect on the
       Company's financial position.

       At December 31, 1995, the Company had an operating loss
       carryforward of approximately $28,000,000 to reduce future taxable
       income.  These operating losses expire at various dates through
       2,009.

       The following summarizes the temporary differences of the Company
       at December 31, 1995 at the current statutory rate:

       Deferred tax asset:
<TABLE>
<S>                                                               <C>
           Net operating loss carryforward                        $10,352,000
           Adjustments to reduce land to
             net realizable value                                     311,000
           Expenses capitalized under IRC 263(a)                       57,000
           ITC carryforward                                           731,000
           Other                                                        7,000
           Valuation allowance                                     (8,972,000)
                                                                  -----------
                                                                    2,486,000
                                                                  -----------

       Deferred tax liability
           Basis difference of land and
             improvement inventories                                2,452,000
           Excess tax over book depreciation                           34,000
                                                                  -----------
                                                                    2,486,000
                                                                  -----------
           Net deferred tax asset                                 $         0
                                                                  ===========
</TABLE>


                                    -11-
<PAGE> 12

                    PGI INCORPORATED AND SUBSIDIARIES

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

Preliminary Note

  The description of the Company's business in the Quarterly Report on
Form 10-QSB 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 and will not be in
a position to do so until its debt obligations have been substantially
reduced.  The reason the Company is no longer pursuing its core business
is set forth with more particularity below.

  During the fiscal year ended December 31, 1995, 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 it's 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 parcels or by selling in bulk.

Results of Operations

  Revenues for the first nine months of 1996 decreased by $254,000 to
$461,000 from $715,000 for the comparable 1995 period.  A net loss of
$2,342,000 was incurred for the first nine months of 1996 compared to
a net loss of $1,912,000 for the first nine months of 1995.  After
consideration of accumulation of preferred dividends in arrears,
totaling $480,000 for each of the nine months ended September 30, 1996
and 1995 ($.15 per share of common stock), net losses per share of $.85
and $.72, respectively, were reported for the nine month periods ended
September 30, 1996 and 1995.

   On March 28, 1996, the Company's primary lender, First Union National
Bank of Florida, a national banking association ("First Union") assigned
to PGIP L.L.C., 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.

   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.  PGIPs 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.


                                    -12-
<PAGE> 13

                    PGI INCORPORATED AND SUBSIDIARIES

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

   PGIP is 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.

  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
primary lender, the satisfaction of $362,000 in other liabilities and
additional closing costs of $71,000.  Included in the 1994 earnings is
a $1.5 million gain related to the sale of the Southern Woods
development.  The 1994 Secured lender Transaction has been treated as
a non-cash transaction in the Company's Statement of Cash Flows.

  Sales revenue by major components for real estate operations,
excluding the effect of the Company's adoption of the installment method
of reporting homesite sales for the three and nine month periods ended
September 30, 1996 and 1995, were:

   Real estate sales and cost of sales for the three and nine months
ended September 30, 1996 and 1995 consisted of:

<TABLE>
<CAPTION>
                                           Three Months Ended                   Nine Months Ended
                                       ---------------------------         ---------------------------
                                       Sept. 30,         Sept. 30,         Sept. 30,         Sept. 30,
                                         1996              1995              1996              1995
                                       ---------         ---------         ---------         ---------
                                             ($ in thousands)                    ($ in thousands)
<S>                                    <C>               <C>               <C>               <C>
   Revenues:
         Homesite sales                $       -         $       -         $       -         $      15
         Home sales                            -                 -                 -                 -
         Acreage sales                         -                 -                 -                 -
                                       ---------         ---------         ---------         ---------
                                       $       -         $       -         $       -         $      15
                                       =========         =========         =========         =========
   Cost of Sales:
         Homesite sales                $       -         $       -         $       -         $      11
         Home sales                            -                 -                 -                 -
         Acreage sales                         -                 -                 -                 -
                                       ---------         ---------         ---------         ---------
                                       $       -         $       -         $       -         $      11
                                       =========         =========         =========         =========
</TABLE>

       Other income for the three and nine months ended September 30,
       1996 and 1995 consisted of:

<TABLE>
<CAPTION>
                                           Three Months Ended                   Nine Months Ended
                                       ---------------------------         ---------------------------
                                       Sept. 30,         Sept. 30,         Sept. 30,         Sept. 30,
                                         1996              1995              1996              1995
                                       ---------         ---------         ---------         ---------
                                             ($ in thousands)                    ($ in thousands)
<S>                                    <C>               <C>               <C>               <C>
   Commission income                   $     107         $      54         $     245         $     212
   Installment sale income                     -                53                 -               151
   Other income                              112                 5               143               201
                                       ---------         ---------         ---------         ---------
                                       $     219         $     112         $     388         $     564
                                       =========         =========         =========         =========
</TABLE>



                                    -13-
<PAGE> 14

                    PGI INCORPORATED AND SUBSIDIARIES

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

   Gross homesite sales revenues decreased to zero for the first nine
months of 1996 from $15,000 for the same period in 1995.  With the
completion of the Second Secured Lender Transaction the Company has sold
all of its developed Sugarmill Woods inventory.  The homesite sales sold
in the first quarter of 1995 represent various lot sales from the
Charlotte County inventory.

   With the assignment of the remaining building contracts to another
Sugarmill Woods builder during 1994, the Company's activity related to
home construction has been suspended.

   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 I - Note 2 - Recognition of Real Estate Sales).  This
method will be utilized for all installment sales regardless of the down
payment percentage.  As a result of the Secured Lender Transaction
non-recourse sale of receivables, all previously deferred profits were
recognized during 1992.

   Cash provided by operating activities for the nine months ended
September 30, 1996 was $148,000 compared to $319,000 for the comparable
1995 period.  During the first nine months of 1996, financing activities
utilized $190,000 in cash flow with $340,000 for normal debt repayment
as compared to $398,000 for the same period in 1995.

Analysis of Financial Condition

   Assets totaled $11.3 million at September 30, 1996 compared to
$11.7 million at December 31, 1995, reflecting the following changes:

<TABLE>
<CAPTION>
                                             Sept. 30,            December 31,               Increase
                                               1996                   1995                  (Decrease)
                                             ---------            ------------              ----------
                                                                 ($ in thousands)
<S>                                          <C>                  <C>                       <C>


  Cash                                       $   1,123            $      1,165              $     (42)
  Receivables                                      358                     693                   (335)
  Land and improvement inventories               9,020                   9,031                    (11)
  Net property and equipment                        54                      81                    (27)
  Other assets                                     752                     766                    (14)
                                             ---------            ------------              ---------
                                             $  11,307            $     11,736              $    (429)
                                             =========            ============              =========
</TABLE>


                                    -14-
<PAGE> 15

                    PGI INCORPORATED AND SUBSIDIARIES

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

   Liabilities were $33.3 million at September 30, 1996 compared to $31.4
million at December 31, 1995, reflecting the following changes among
categories.

<TABLE>
<CAPTION>
                                             Sept. 30,            December 31,               Increase
                                               1996                   1995                  (Decrease)
                                             ---------            ------------              ----------
                                                                 ($ in thousands)
<S>                                          <C>                  <C>                       <C>
  Accounts payable                           $     108            $         91              $       17
  Other liabilities                              1,525                   1,143                     382
  Accrued interest                              10,178                   8,471                   1,707
  Credit agreements - primary lender             7,283                   7,287                      (4)
  Notes and mortgages payable                    3,613                   3,802                    (189)
  Convertible subordinated
    debentures payable                           9,059                   9,059                       -
  Convertible debentures payable                 1,500                   1,500                       -
                                             ---------            ------------              ----------
                                             $  33,266            $     31,353              $    1,913
                                             =========            ============              ==========
</TABLE>

   The Company has aggressively taken steps to curtail and simplify
operations as well as concentrate on major bulk sales of its undeveloped
acreage.  The Company remains totally dependent upon the sale of property
to fund its operations and debt service requirements.

  The Company remains in default of the entire principal plus interest on
its convertible subordinated debentures.  The amounts due are as indicated
in the following table:

<TABLE>
<CAPTION>
                                                                               Sept. 30, 1996
                                                                    ----------------------------------
                                                                     Principal                 Unpaid
                                                                    Amount Due                Interest
                                                                    ----------                --------
                                                                              ($ in thousands)
<S>                                                                 <C>                       <C>
  Convertible subordinated debentures due June 1, 1991              $    1,034                $    450
  Convertible subordinated debentures due May 1, 1992                    8,025                   3,642
                                                                    ----------                --------
                                                                    $    9,059                $  4,092
                                                                    ==========                ========
</TABLE>

 The Company does not have funds available to make any payments of
either principal or interest on the above debentures.  The Company has
investigated the consequences of a bankruptcy filing and believes that
such a course is not in the best interest of either the debenture or
equity holders because a bankruptcy filing would negatively impact the
Company's business and its ability to maximize its results from bulk
sales of land.


                                    -15-
<PAGE> 16


                    PGI INCORPORATED AND SUBSIDIARIES


PART II    Other Information

Item 1     Legal Proceedings

           Not applicable.


Item 2     Changes in Securities

           Not applicable.


Item 3     Defaults Upon Senior Securities

 See  discussion  in  Item 2 with respect to defaults on the  Company's
convertible subordinated debentures and collateralized convertible
debentures, which discussion is incorporated herein by this reference.


Item 4     Submission of Matters to a Vote of Security Holders

           Not applicable.


Item 5     Other Information

           Not applicable.


Item 6     Exhibits and Reports on Form 8-K

  (a)  Exhibits - reference is made to the Exhibit Index contained on
       page 18 herein for a list of exhibits filed under this Item.

  (c)  No report on Form 8-K was filed during the quarter ended September
       30, 1996.



                                    -16-
<PAGE> 17

                    PGI INCORPORATED AND SUBSIDIARIES

                              SIGNATURES



 In accordance with the requirement of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                   PGI INCORPORATED
            ------------------------------
                     (Registrant)



Date:         November 13, 1996                 /s/Laurence A. Schiffer
      ---------------------------------         -------------------------------
                                                Laurence A. Schiffer
                                                President


                                    -17-
<PAGE> 18

                    PGI INCORPORATED AND SUBSIDIARIES

<TABLE>
EXHIBIT INDEX
-------------
<CAPTION>
                                                                      Sequential
                                                                      Page Number
<S>                                                                   <C>
 2.  Inapplicable.

 3.  Inapplicable.

 4.  Inapplicable.

10.  Inapplicable.

11.  Statements re:  Computations of Per Share Earnings, filed
     herewith.................................................            19

15.  Inapplicable.

18.  Inapplicable.

19.  Inapplicable.

22.  Inapplicable.

23.  Inapplicable.

24.  Inapplicable.

27.  Financial Data Schedule..................................            20

</TABLE>

                                    -18-
<PAGE> 19
<TABLE>
                                                 PGI INCORPORATED AND SUBSIDIARIES

                                            FACTS FOR COMPUTATION OF NET LOSS PER SHARE
<CAPTION>
                                                                     Three Months Ended Sept. 30,   Nine Months Ended Sept. 30,
                                                                     ----------------------------   ---------------------------
                                                                            1996           1995            1996            1995
                                                                            ----           ----            ----            ----
<S>                                                                   <C>            <C>            <C>             <C>
1) Net loss for period                                                $ (680,000)    $ (683,000)    $(2,342,000)    $(1,912,000)
2) Average shares outstanding before assumed exercise of stock
   options and conversion of preferred stock and debentures            3,317,555      3,317,555       3,317,555       3,317,555
                                                                      ==========     ==========     ===========     ===========
3) Average shares outstanding from assumed exercise of stock options:
     Primary                                                                   -              -               -               -
                                                                      ==========     ==========     ===========     ===========
     Fully diluted                                                             -              -               -               -
                                                                      ==========     ==========     ===========     ===========
4) Average shares outstanding from assumed conversion of preferred
   stock                                                               3,760,000      3,760,000       3,760,000       3,760,000
                                                                      ==========     ==========     ===========     ===========
5) Average shares outstanding from assumed conversion of debentures    1,341,076      1,341,076       1,341,076       1,341,076
                                                                      ==========     ==========     ===========     ===========
6) Cumulative preferred dividends in arrears                          $  160,000     $  160,000     $   480,000     $   480,000
                                                                      ==========     ==========     ===========     ===========
7) Interest and amortization charged against income for debentures
   during period                                                      $  190,000     $  190,000     $   569,000     $   569,000
                                                                      ==========     ==========     ===========     ===========
ADJUSTMENT OF NET LOSS:
----------------------
  Primary
  -------
    Net loss for period (Line 1)                                      $ (680,000)    $ (683,000)    $(2,342,000)    $(1,912,000)
    Less cumulative preferred dividends in arrears (Line 6)             (160,000)      (160,000)       (480,000)       (480,000)
                                                                      ----------     ----------     -----------     -----------
8) Adjusted net loss for primary net loss per share                   $ (840,000)    $ (843,000)    $(2,822,000)    $(2,392,000)
                                                                      ==========     ==========     ===========     ===========
  Fully Diluted
  -------------
    Adjusted net loss for primary net loss per share (Line 8)         $ (840,000)    $ (843,000)    $(2,822,000)    $(2,392,000)
    Add cumulative preferred dividends in arrears on preferred stock
      assumed converted (Line 6)                                         160,000        160,000         480,000         480,000
    Add interest and amortization charged against income for
      debentures during period (Line 7)                                  190,000        190,000         569,000         569,000
    Tax effect on Line 7                                                       -<FA>          -<FA>           -<FA>           -<FA>
                                                                      ----------     ----------     -----------     -----------
9) Adjusted net loss for fully diluted net loss per share             $ (490,000)    $ (493,000)    $(1,773,000)    $(1,343,000)
                                                                      ==========     ==========     ===========     ===========
ADJUSTMENT OF AVERAGE SHARES OUTSTANDING
----------------------------------------
  Primary
  -------
    Average shares outstanding (Line 2)                                3,317,555      3,317,555       3,317,555       3,317,555
    Average shares outstanding (Line 3)                                        -              -               -               -
                                                                      ----------     ----------     -----------     -----------
10) Shares assumed outstanding for primary net loss per share          3,317,555      3,317,555       3,317,555       3,317,555
                                                                      ==========     ==========     ===========     ===========
  Fully Diluted
  -------------
    Average shares outstanding (Line 2)                                3,317,555      3,317,555       3,317,555       3,317,555
    Average shares outstanding from assumed exercise of stock
      options (Line 3)                                                         -              -               -               -
    Average shares outstanding from assumed conversion of preferred
      stock (Line 4)                                                   3,760,000      3,760,000       3,760,000       3,760,000
    Average shares outstanding from assumed conversion of debentures
      (Line 5)                                                         1,341,076      1,341,076       1,341,076       1,341,076
                                                                      ----------     ----------     -----------     -----------
11) Shares assumed outstanding for fully diluted net loss per share    8,418,631      8,418,631       8,418,631       8,418,631
                                                                      ==========     ==========     ===========     ===========
NET LOSS PER SHARE:
-------------------
Before Adjustment
-----------------
  (Line 1 divided by Line 2)                                              $ (.20)        $ (.21)         $ (.71)         $ (.58)
                                                                          ======         ======          ======          ======
Primary
-------
Net loss
  (Line 8 divided by Line 10)                                             $ (.25)        $ (.25)         $ (.85)         $ (.72)
                                                                          ======         ======          ======          ======
Fully Diluted<FB>
-------------
  Net loss<FB>                                                            $ (.25)        $ (.25)         $ (.85)         $ (.72)
                                                                          ======         ======          ======          ======
<FN>
--------------------------
<FA> No tax calculation has been made because of full utilization of all available tax benefits for financial account purposes.
<FB> Fully diluted net loss per share is the same as primary net loss per share due to anti-dilutive effect of assumed exercise of
     stock options and conversion of preferred stock and debentures to common stock.
</TABLE>

                                    -19-