<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, 1997
                                      -----------------------------------------
                                       OR

/X/ 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 14, 1997
there were 5,317,758 shares of the Registrant's common stock outstanding.

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

                                    -1-
<PAGE> 2

                      PGI INCORPORATED AND SUBSIDIARIES
                                 FORM 10-QSB
                  For the Quarter Ended September 30, 1997

<TABLE>
                                    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, 1997 and December 31, 1996                                 3
                Consolidated Statements of Operations
                   Three and Nine Months Ended September 30, 1997 and 1996                  4
                Condensed Consolidated Statements of Cash Flows
                   Nine Months Ended September 30, 1997 and 1996                            5
                Notes to Consolidated Financial Statements
                   for Form 10-QSB                                                       6-10

   Item 2       Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                                  11-14


PART II      Other Information

   Item 1       Legal Proceedings                                                          15
   Item 2       Changes in Securities                                                      15
   Item 3       Defaults Upon Senior Securities                                            15
   Item 4       Submission of Matters to a Vote of Security Holders                        15
   Item 5       Other Information                                                          15
   Item 6       Exhibits and Reports on Form 8-K                                        17-19

SIGNATURES                                                                                 16
</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>
                                                                         September 30,            December 31,
                                                                             1997                    1996
                                                                         ------------             -----------
                                                                          (unaudited)
<S>                                                                        <C>                    <C>
ASSETS

      Cash and Cash Equivalents                                            $      5                $     12
      Restricted Cash                                                         1,131                   1,140
      Receivables on real estate sales - net                                    131                     318
      Other receivables                                                          35                      26
      Land and improvement inventories                                        9,003                   9,016
      Property and equipment - net                                               21                      46
      Other assets                                                              763                     759
                                                                           --------                --------
                                                                           $ 11,089                $ 11,317
                                                                           ========                ========

LIABILITIES
      Accounts payable                                                     $    193                $     78
      Other liabilities                                                       1,661                   1,428
      Accrued interest:
         Primary lender                                                       3,207                   2,461
         Debentures                                                           7,887                   6,880
         Other                                                                1,581                   1,449
      Credit agreements -
         Primary lender                                                       7,343                   7,307
      Notes and mortgages payable                                             3,685                   3,667
      Convertible subordinated
         debentures payable                                                   9,059                   9,059
      Convertible debentures payable                                          1,500                   1,500
                                                                           --------                --------

                                                                           $ 36,116                $ 33,829
                                                                           --------                --------
      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; 5,317,758 and
         3,317,555 shares issued and outstanding                                532                     332
      Paid in capital                                                        13,498                  13,698
      Accumulated deficit                                                   (41,057)                (38,542)
                                                                           --------                --------

                                                                            (25,027)                (22,512)
                                                                           --------                --------

                                                                           $ 11,089                $ 11,317
                                                                           ========                ========

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,
                                                              1997               1996                1997             1996
                                                            --------           --------            --------         --------
<S>                                                         <C>                 <C>               <C>              <C>
REVENUES
      Interest income                                            3                 19                  23               73
      Other income                                             137                219                 412              388
                                                            ------              -----             -------          -------
                                                               140                238                 435              461
                                                            ------              -----             -------          -------

COSTS AND EXPENSES
      Selling expenses                                           2                  1                   6               10
      General & administrative expenses                        257                162                 620              654
      Interest                                                 682                646               2,008            1,857
      Other expenses                                            91                109                 316              282
                                                            ------              -----             -------          -------
                                                             1,032                918               2,950            2,803
                                                            ------              -----             -------          -------

NET INCOME (LOSS)                                           $ (892)             $(680)            $(2,515)         $(2,342)
                                                            ======              =====             =======          =======

NET INCOME (LOSS) PER SHARE (F*)
      Primary and fully diluted                             $ (.20)             $(.25)            $  (.69)         $  (.85)
                                                            ======              =====             =======          =======

<FN>
(F*)   Considers the effect of cumulative preferred dividends in arrears for the three
       and nine months ended September 30, 1997 and 1996.

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,
                                                                               1997             1996
                                                                             ---------        ---------
<S>                                                                           <C>               <C>
Net cash provided by (used in) operating activities                           $ (59)            $ 136
                                                                              -----             -----
Cash flows from investing Activities:
      Purchase of property and equipment                                         (2)               --
                                                                              -----             -----
      Net cash used in investing activities                                      (2)               --
                                                                              -----             -----
Cash flows from financing activities:
      Proceeds from borrowings                                                  172               150
      Principal payments on debt                                               (118)             (340)
                                                                              -----             -----
      Net cash provided by (used in) financial activities                        54              (190)
                                                                              -----             -----
Net increase (decrease) in cash                                                  (7)              (54)

Cash at beginning of period                                                      12                63
                                                                              -----             -----
Cash at end of period                                                         $   5             $   9
                                                                              =====             =====

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 10QSB 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, 1996.

      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, 1996, as contained in the Company's
      Annual Report on Form 10KSB/A, 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
      and refinancing 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, 1997 are not necessarily indicative of operations to be
      expected for the fiscal year ending December 31, 1997 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

(3)   Per Share Data

      Primary per share amounts are computed by dividing net income (loss),
      after considering cumulative 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, 1997 and 1996.
      The average number of common shares outstanding for the nine months
      ended September 30, 1997 and 1996 was 4,335,973 and 3,317,555,
      respectively. On May 15, 1997, preferred dividends accrued through
      April 25, 1995 were paid in the form of 2,000,203 shares of common
      stock.

      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, 1997 and 1996, 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 antidilutive.

(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, 1997
      and 1996 was $121,000 and $149,000, 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

(6)   Receivables on Real Estate Sales

      Net receivables on real estate sales consisted of:

<TABLE>
<CAPTION>
                                          September 30,       December 31,
                                              1997               1996
                                          -------------       ------------
                                                  ($ in thousands)
<S>                                           <C>               <C>
  Contracts receivable on homesite sales      $ 855             $1,076
  Other                                          91                 98
                                              -----             ------
                                                946              1,174
  Less:  Allowance for cancellations           (771)              (806)
         Unamortized valuation discount         (44)               (50)
                                              -----             ------
                                              $ 131             $  318
                                              =====             ======
</TABLE>

(7)   Land and Improvements

      Land and improvement inventories consisted of:
<TABLE>
<CAPTION>
                                          September 30,       December 31,
                                              1997               1996
                                          -------------       ------------
                                                  ($ in thousands)
<S>                                          <C>                <C>
  Unimproved land                            $8,724             $8,724
  Fully improved land                           279                292
                                             ------             ------
                                             $9,003             $9,016
                                             ======             ======
</TABLE>

(8)   Property and Equipment

      Property and equipment consisted of:
<TABLE>
<CAPTION>
                                          September 30,       December 31,
                                              1997               1996
                                          -------------       ------------
                                                  ($ in thousands)
<S>                                            <C>              <C>
      Furniture, fixtures and other equipment  $ 212             $ 363
      Less:  Accumulated depreciation           (191)             (317)
                                               -----             -----
                                               $  21             $  46
</TABLE>                                       =====             =====

(9)    Other Assets

       Other assets consisted of:
<TABLE>
<CAPTION>
                                          September 30,       December 31,
                                              1997               1996
                                          -------------       ------------
                                                  ($ in thousands)
<S>                                           <C>               <C>
      Guaranteed future connections, net      $621              $621
      Deposit with Trustee of 6-1/2%
        debentures                             130               125
      Other                                     12                13
                                              ----              ----
                                              $763              $759
                                              ====              ====
</TABLE>


                                    -8-
<PAGE> 9

                       PGI INCORPORATED AND SUBSIDIARIES

(10)  Other Liabilities

      Other Liabilities consisted of:
<TABLE>
<CAPTION>
                                          September 30,       December 31,
                                              1997               1996
                                          -------------       ------------
                                                  ($ in thousands)
<S>                                          <C>               <C>
      Accrued property taxes
        - current                            $  154            $  208
        - delinquent                            778               476
      Other accrued expenses                    331               316
      Deposits, advances and escrows            316               346
      Estimated recourse liability for
        receivables sold                         66                66
      Other                                      16                16
                                             ------            ------
                                             $1,661            $1,428
                                             ======            ======
</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>
                                                  September 30,       December 31,
                                                      1997               1996
                                                  -------------       ------------
                                                          ($ in thousands)
<S>                                                   <C>               <C>
      Credit agreements - primary lender:
        (maturing July 8, 1997, bearing interest
        at prime plus 5%):                            $ 7,343           $ 7,307

      Notes and mortgages payable - $1,267,000
        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             3,685             3,667
                                                      -------           -------

      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
                                                      -------           -------
                                                      $21,587           $21,533
                                                      =======           =======
</TABLE>


                                    -9-
<PAGE> 10

                       PGI INCORPORATED AND SUBSIDIARIES

(12)  Real Estate Sales and Other Income

      There were no real estate sales for the nine months ended
      September 30, 1997 and 1996.

      Other income for the three and nine months ended September 30, 1997
      and 1996 consisted of:

<TABLE>
<CAPTION>
                                    Three Months Ended       Nine Months Ended
                                   --------------------    ---------------------
                                   Sept. 30,   Sept.30,    Sept. 30,   Sept. 30,
                                     1997        1996        1997        1996
                                   ---------   --------    ---------   ---------
                                     ($ in thousands)        ($ in thousands)
<S>                                  <C>         <C>         <C>         <C>
Commission income                    $ 91        $107        $292        $245
      Other income                     46         112         120         143
                                     ----        ----        ----        ----
                                     $137        $219        $412        $388
                                     ====        ====        ====        ====
</TABLE>

(13)  Commitments and Contingencies

      The aggregate outstanding balances of all receivables sold and
      exchanged with recourse totaled $157,000 and $246,000 at September 30,
      1997 and December 31, 1996, respectively. Based on its collection
      experience with such receivables, the Company maintained allowances at
      both September 30, 1997 and December 31, 1996, classified in other
      liabilities, of $66,000 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
      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, 1996, the Company had an operating loss carryforward of
      approximately $34,000,000 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, 1996 at the current statutory rate:

<TABLE>
<S>                                                                          <C>
      Deferred tax asset:
         Net operating loss carryforward                                     $ 12,531,000
         Adjustments to reduce land to
           net realizable value                                                    12,000
         Expenses capitalized under IRC 263(a)                                     56,000
           ITC carryforward                                                       215,000
         Other                                                                      2,000
         Valuation allowance                                                  (10,347,000)
                                                                             ------------
                                                                                2,469,000
      Deferred tax liability                                                 ------------
         Basis difference of land and
           improvement inventories                                              2,453,000
         Excess tax over book depreciation                                         16,000
                                                                             ------------
                                                                                2,469,000
                                                                             ------------
         Net deferred tax asset                                              $          0
                                                                             ============
</TABLE>


                                    -10-
<PAGE> 11

                       PGI INCORPORATED AND SUBSIDIARIES

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

Preliminary Note

      Readers should understand as they read this report 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 with more particularity 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
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 properties or by selling in bulk.

      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.  A First Amendment and a Second Amendment to the
Option Agreement For Sale and Purchase have been executed extending the
option expiration date to March 3, 1998 and extending the date for PGI
shareholder approval to October 31, 1997.  For various reasons, the Company
was unable to hold the Annual Meeting on or prior to October 31, 1997.
The Company intends nevertheless to submit the sale of such property to the
vote of the Company's shareholders at an annual meeting which the Company
hopes to hold later this year.  The Company views the October 31, 1997 date as
a condition of the Option Agreement as Amended which the Purchaser has the
power to waive.  In other words, if the Company's shareholders approve the sale
of the property and the Purchaser exercises the option and purchases the
property, the Purchaser could close the purchase of the property regardless of
when shareholder approval is obtained.

Results of Operations

      Revenues for the first nine months of 1997 decreased by $26,000 to
$435,000 from $461,000 for the comparable 1996 period.  A net loss of
$2,515,000 was incurred for the first nine months of 1997 compared to a net
loss of $2,342,000 for the first nine months of 1996.  After consideration of
cumulative preferred dividends in arrears, totaling $480,000 for each of the
nine months ended September 30, 1997 and 1996 ($.15 per share of common
stock), net losses per share of $.69 and $.85, respectively, were reported
for the nine month periods ended September 30, 1997 and 1996.

      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.


                                    -11-
<PAGE> 12

                       PGI INCORPORATED AND SUBSIDIARIES

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

      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
disposition 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.

      The largest investor in PGIP is Love Savings Holding Company ("LSHC")
which holds approximately a 72% interest.  Messrs. Love and Schiffer own
approximately 52% of LSHC and serve as the only directors and executive
officers of LSHC.  Messrs. Love, Schiffer and LSHC are the managers of PGIP.
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.

      There were no real estate sales for the nine months ended September 30,
1997 and 1996.

      Other income for the three and nine months ended September 30, 1997 and
1996 consisted of:

<TABLE>
<CAPTION>
                                        Three Months Ended                  Nine Months Ended
                                   ---------------------------         ---------------------------
                                   Sept. 30,         Sept. 30,         Sept. 30,         Sept. 30,
                                     1997              1996              1997              1996
                                   ---------         ---------         ---------         ---------
                                        ($ in thousands)                     ($ in thousands)
<S>                                  <C>               <C>               <C>               <C>
Commission income                    $ 91              $107              $292              $245
Other income                           46               112               120               143
                                     ----              ----              ----              ----
                                     $137              $219              $412              $388
                                     ====              ====              ====              ====
</TABLE>

      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.

      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 nonrecourse sale of receivables, all
previously deferred profits were recognized


                                    -12-
<PAGE> 13

                     PGI INCORPORATED AND SUBSIDIARIES

during 1992.


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

      Cash used in operating activities for the nine months ended September
30, 1997 was $59,000 compared to $136,000 cash provided by operating
activities for the comparable 1996 period.  During the first nine months of
1997, financing activities provided  $54,000 in cash flow with $172,000 in
proceeds from borrowings.  Net cash used in financing activities was $118,000
for normal debt repayment as compared to $340,000 for the same period in
1996.

Analysis of Financial Condition

      Assets totaled $11.1 million at September 30, 1997 compared to $11.3
million at December 31, 1996, reflecting the following changes:

<TABLE>
<CAPTION>
                                             September 30,      December 31,       Increase
                                                 1997              1996           (Decrease)
                                             -------------      ------------      ----------
                                                            ($ in thousands)
<S>                                            <C>               <C>                <C>
Cash and Cash Equivalents                      $     5           $    12            $  (7)
Restricted Cash                                  1,131             1,140               (9)
Receivables                                        166               344             (178)
Land and improvement inventories                 9,003             9,016              (13)
Net property and equipment                          21                46              (25)
Other assets                                       763               759                4
                                               -------           -------            -----
                                               $11,089           $11,317            $(228)
                                               =======           =======            =====


                                    -13-
<PAGE> 14

                     PGI INCORPORATED AND SUBSIDIARIES

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

      Liabilities were $36.1 million at September 30, 1997 compared to $33.8
million at December 31, 1996, reflecting the following changes among
categories.


</TABLE>
<TABLE>
<CAPTION>
                                             September 30,      December 31,       Increase
                                                 1997              1996           (Decrease)
                                             -------------      ------------      ----------
                                                            ($ in thousands)
<S>                                            <C>               <C>                <C>
Accounts payable                               $   193           $    78            $  115
Other liabilities                                1,661             1,428               233
Accrued interest                                12,675            10,790             1,885
Credit agreements - primary lender               7,343             7,307                36
Notes and mortgages payable                      3,685             3,667                18
Convertible subordinated
  debentures payable                             9,059             9,059                --
Convertible debentures payable                   1,500             1,500                --
                                               -------           -------            ------
                                               $36,116           $33,829            $2,287
                                               =======           =======            ======
</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>
                                                                                      September 30, 1997
                                                                                   --------------------------
                                                                                   Principal          Unpaid
                                                                                   Amount Due        Interest
                                                                                   ----------        --------
                                                                                        ($ in thousands)
<S>                                                                                 <C>               <C>
      Convertible subordinated debentures due June 1, 1991                          $1,034            $  522
      Convertible subordinated debentures due May 1, 1992                            8,025             4,316
                                                                                    ------            ------
                                                                                    $9,059            $4,838
                                                                                    ======            ======
</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
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.


                                    -14-
<PAGE> 15

                 PGI INCORPORATED AND SUBSIDIARIES

PART II           Other Information

Item 1            Legal Proceedings

      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.


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 8K

      (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, 1997.



                                    -15-
<PAGE> 16

                     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 14, 1997               /s/ Laurence A. Schiffer
      -------------------------------       ------------------------------
                                            Laurence A. Schiffer
                                            President



                                    -16-
<PAGE> 17

                     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>


                                    -17-