<PAGE>
<PAGE>

              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, 1998
                                   ----------------------
                          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
November  13, 1998 there were 5,317,758 shares of the Registrant's
common stock outstanding.

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


<PAGE>
<PAGE>
                     PGI INCORPORATED AND SUBSIDIARIES

<TABLE>
                                   FORM 10-QSB
                   For the Quarter Ended September 30, 1998
                                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, 1998 and December 31, 1997                            3
          Consolidated Statements of Operations
             Three and Nine Months Ended September 30, 1998 and 1997             4
          Condensed Consolidated Statements of Cash Flows
             Nine Months Ended September 30, 1998 and 1997                       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                                   16

SIGNATURES                                                                      17
</TABLE>

                                   2<PAGE>
<PAGE>
                     PGI INCORPORATED AND SUBSIDIARIES


PART I    Financial Information

  Item 1  Financial Statements

<TABLE>
                    CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                  ($ in thousands)
<CAPTION>
                                                             Sept. 30,          Dec. 31,
                                                               1998              1997
                                                               ----              ----
                                                            (unaudited)
<S>                                                          <C>               <C>
ASSETS

   Cash and Cash Equivalents                                 $    181          $      2
   Restricted Cash                                              1,936             1,173
   Receivables on real estate sales - net                          98               156
   Other receivables                                               55                28
   Land and improvement inventories                               889             8,992
   Property and equipment - net                                     1                18
   Other assets                                                   158               759
                                                             --------          --------
                                                             $  3,318          $ 11,128
                                                             ========          ========

LIABILITIES
   Accounts payable                                          $     12          $    285
   Other liabilities                                            1,305             1,727
   Accrued interest:
      Primary lender                                               11             3,461
      Debentures                                                9,333             8,238
      Other                                                     1,625             1,629
   Credit agreements -
      Primary lender                                            1,000             7,344
   Notes and mortgages payable                                  1,198             3,750
   Convertible subordinated
      debentures payable                                        9,059             9,059
   Convertible debentures payable                               1,500             1,500
                                                             --------          --------

                                                             $ 25,043          $ 36,993
                                                             --------          --------

   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
      shares issued and outstanding                               532               532
   Paid in capital                                             13,498            13,498
   Accumulated deficit                                        (37,755)          (41,895)
                                                             --------          --------

                                                              (21,725)          (25,865)
                                                             --------          --------

                                                             $  3,318          $ 11,128
                                                             ========          ========

See accompanying notes to consolidated financial statements for Form 10-QSB.
</TABLE>

                                   3<PAGE>
<PAGE>
                     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,
                                         1998             1997              1998          1997
                                       --------         --------          --------      --------
<S>                                     <C>              <C>              <C>            <C>
REVENUES
   Real Estate Sales                       28                 -            13,475              -
   Interest income                          2                 3                 9             23
   Other income                           140               137             1,461            412
                                        -----            ------           -------        -------
                                          170               140            14,945            435
                                        -----            ------           -------        -------

COSTS AND EXPENSES
   Costs of Real Estate Sales               5                 -             8,432              -
   Selling expenses                         5                 2                20              6
   General & administrative expenses       52               257               395            620
   Interest                               438               682             1,703          2,008
   Other expenses                          82                91               255            316
                                        -----            ------           -------        -------
                                          582             1,032            10,805          2,950
                                        -----            ------           -------        -------

NET INCOME (LOSS)BEFORE INCOME TAX      $(412)           $ (892)            4,140         (2,515)

CREDIT FOR INCOME TAX                     104                 -                 -              -
                                        -----            ------           -------        -------
NET INCOME (LOSS)                       $(308)           $ (892)          $ 4,140        $(2,515)
                                        =====            ======           =======        =======
NET INCOME (LOSS) PER SHARE <F*>
   Primary and fully diluted            $(.09)           $ (.20)          $   .69        $  (.69)
                                        =====            ======           =======        =======

<FN>
<F*>  Considers the effect of cumulative preferred dividends in
      arrears for the three and nine months ended September 30, 1998
      and 1997.

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

</TABLE>


                                   4


















<PAGE>
<PAGE>
                     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,
                                                                     1998      1997
                                                                   --------  --------
<S>                                                                <C>        <C>
Net cash provided by (used in) operating activities                $ 7,686    $ (59)
                                                                   -------    -----

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                                             31      172
                                                                   -------    -----
   Principal payments on debt                                       (7,538)    (118)
                                                                   -------    -----
   Net cash provided by (used in) financial activities              (7,507)      54
                                                                   -------    -----

Net increase (decrease) in cash                                        179       (7)

Cash at beginning of period                                              2       12
                                                                   -------    -----

Cash at end of period                                              $   181    $   5
                                                                   =======    =====


See accompanying notes to consolidated financial statements for Form 10-QSB.
</TABLE>

                                   5
<PAGE>
<PAGE>
                    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, 1997.

     The Company remains in default under the indentures governing its
     convertible unsecured subordinated debentures and in default of
     its primary debt obligations. A significant payment on the primary
     debt obligation occurred with the sale of the undeveloped land in
     Citrus County upon closing May 13, 1998.  (See Management's
     Discussion and Analysis of Financial Condition and Results of
     Operations and Notes 10 and 11 to the Company's consolidated
     financial statements for the year ended December 31, 1997, as
     contained in the Company's Annual Report on Form 10-KSB).

     All adjustments (consisting of only normal recurring accruals)
     necessary for fair presentation of financial position, results of
     operations and cash flows have been made. The results for the
     three and nine months ended September 30, 1998 are not necessarily
     indicative of operations to be expected for the fiscal year ending
     December 31, 1998 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.

(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, 1998 and 1997. The average number of common
     shares outstanding for the nine months ended September 30, 1998
     and 1997 was 5,317,758 and 4,335,973, 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.

                                   6
<PAGE>
<PAGE>
                     PGI INCORPORATED AND SUBSIDIARIES

     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, 1998 and
     1997, 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.

     The following is a summary of the calculations used in computing
     basic and diluted income(loss) per share for the three and nine
     months ended September 30, 1998 and 1997:


<TABLE>
<CAPTION>
                                       Three Months Ended            Nine Months Ended
                                       ------------------            -----------------
                                    Sept. 30,     Sept. 30,      Sept. 30,     Sept. 30,
                                      1998           1997          1998          1997
                                    ---------     ---------      ---------     ---------
<S>                                <C>           <C>             <C>          <C>
Net Income (Loss)                   (308,000)      (892,000)     4,140,000    (2,515,000)
Preferred Dividends                 (160,000)      (160,000)      (480,000)     (480,000)
                                   ---------     ----------      ---------    ----------
Income (Loss) Avail-
able to Common
Shareholders                        (468,000)    (1,052,000)     3,660,000    (2,995,000)
                                   =========     ==========      =========    ==========
Weighted Amount of
Shares Outstanding                 5,317,758      5,317,758      5,317,758     4,335,973

Basic and Diluted
Income (Loss) Per
Share                                   (.09)          (.20)           .69          (.69)
                                                                             
</TABLE>

                                   7
<PAGE>
<PAGE>
                     PGI INCORPORATED AND SUBSIDIARIES

(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, 1998 and 1997 was $231,000 and
     $121,000, 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 pledged to agencies in various
     states and local Florida governmental units related to land
     development and environmental matters, real estate taxes in
     litigation, collateral for primary lender debt, 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.

(6)  Receivables on Real Estate Sales

     Net receivables on real estate sales consisted of:

<TABLE>
<CAPTION>
                                                            Sept. 30,    December 31,
                                                              1998          1997
                                                            ---------    ------------
                                                               ($ in thousands)
<S>                                                          <C>            <C>
      Contracts receivable on homesite sales                 $ 760          $ 816
      Other                                                     83             89
                                                             -----          -----
                                                               843            905
      Less:  Allowance for cancellations                      (706)          (706)
             Unamortized valuation discount                    (39)           (43)
                                                             -----          -----
                                                             $  98          $ 156
                                                             =====          =====
</TABLE>

(7)   Land and Improvements

      Land and improvement inventories consisted of:

<TABLE>
<CAPTION>
                                                            Sept. 30,     Dec. 31,
                                                              1998         1997
                                                            ---------     --------
                                                               ($ in thousands)
<S>                                                          <C>          <C>
      Unimproved land                                        $629          $8,724
      Fully improved land                                     260             268
                                                             ----          ------
                                                             $889          $8,992
                                                             ====          ======
</TABLE>

                                   8<PAGE>
<PAGE>
                     PGI INCORPORATED AND SUBSIDIARIES

(8)   Property and Equipment

      Property and equipment consisted of:
<TABLE>
<CAPTION>
                                                            Sept. 30,      Dec. 31,
                                                              1998          1997
                                                            ---------      --------
                                                               ($ in thousands)
<S>                                                           <C>           <C>
      Furniture, fixtures and other equipment                 $ 93          $ 212
      Less:  Accumulated depreciation                          (92)          (194)
                                                              ----          -----
                                                              $  1          $  18
                                                              ====          =====
</TABLE>

(9)   Other Assets

      Other assets consisted of:
<TABLE>
<CAPTION>
                                                            Sept. 30,      Dec. 31,
                                                              1998          1997
                                                            ---------      --------
                                                               ($ in thousands)
<S>                                                           <C>           <C>
      Guaranteed future connections, net                      $  -          $621
      Deposit with Trustee of 6-1/2% debentures                137           131
      Other                                                     21             7
                                                              ----          ----
                                                              $158          $759
                                                              ====          ====
</TABLE>

(10)  Other Liabilities

      Other Liabilities consisted of:
<TABLE>
<CAPTION>
                                                            Sept. 30,      Dec. 31,
                                                              1998          1997
                                                            ---------      --------
                                                               ($ in thousands)
<S>                                                         <C>            <C>
      Accrued property taxes
        - current                                           $   35         $  230
        - delinquent                                           679            745
      Other accrued expenses                                   322            342
      Deposits, advances and escrows                           215            336
      Estimated recourse liability for
        receivables sold                                        38             58
      Other                                                     16             16
                                                            ------         ------
                                                            $1,305         $1,727
                                                            ======         ======
</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,     Dec. 31,
                                                              1998         1997
                                                            ---------     --------
                                                                ($ in thousands)
<S>                                                         <C>           <C>
      Credit agreements - primary lender:
        (maturing July 8, 1997, bearing interest
        at prime plus 5%)                                   $ 1,000       $ 7,344

        Notes and mortgages payable - certain
        balances at December 31, 1997 were
        paid in the second quarter of 1998.
        The balance at September 30, 1998 primarily
        consists of $1,176,000 bearing interest
        at prime plus 2%.                                     1,198         3,750
                                                            -------       -------
                                   9
<PAGE>
<PAGE>
                     PGI INCORPORATED AND SUBSIDIARIES

      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
                                                            -------       -------
                                                            $12,757       $21,653
                                                            =======       =======

</TABLE>

(12)  Real Estate Sales and Other Income
      
      Real Estate Sales and Cost of Sales consisted of:

<TABLE>
<CAPTION>

                                            Three Months Ended       Nine Months Ended
                                          ----------------------  ----------------------
                                          Sept. 30,    Sept. 30,  Sept. 30,    Sept. 30,
                                            1998         1997       1998         1997
                                          ---------    ---------  ---------    ---------
                                             ($ in thousands)      ($ in thousands)
<S>                                          <C>         <C>       <C>            <C>
      Sales:
        Homesite Sales                       $28           -       $    28        $ -
        Acreage Sales                          -                    13,447          -
                                             ---         ---       -------        ---
                                              28           -       $13,475        $ -
                                             ===         ===       =======        ===
      Cost of Sales:
        Homesite Sales                       $ 5                         5
        Acreage Sales                          -         $ -         8,427        $ -
                                             ---         ---       -------        ---
                                             $ 5                   $ 8,432
                                             ===         ===       =======        ===
 
</TABLE>

 Other income consisted of:
<TABLE>
<CAPTION>
                                            Three Months Ended       Nine Months Ended
                                          ----------------------  ----------------------
                                          Sept. 30,    Sept. 30,  Sept. 30,    Sept. 30,
                                            1998         1997       1998         1997
                                          ---------    ---------  ---------    ---------
                                             ($ in thousands)      ($ in thousands)
<S>                                          <C>         <C>       <C>            <C>
      Commission income                      $ 80        $ 91      $  247         $292
      Reduction of previously accrued
        property taxes                          -           -         248            -
      Debt release settlement                   -           -         870            -
      Other income                             60          46          96          120
                                             ----        ----      ------         ----
                                             $140        $137      $1,461         $412
                                             ====        ====      ======         ====
</TABLE>

(13)  Commitments and Contingencies

      The aggregate outstanding balances of all receivables sold and
      exchanged with recourse totaled $83,000 and $145,000 at September
      30, 1998 and December 31, 1997, respectively. Based on its
      collection experience with such receivables, the Company
      maintained allowances at September 30, 1998 and December 31, 1997,
      classified in other liabilities, of $38,000 and $58,000
      respectively for the recourse provisions related to all
      receivables sold.

                                   10
<PAGE>
<PAGE>
                     PGI INCORPORATED AND SUBSIDIARIES

(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.

     At December 31, 1997, the Company had an operating loss
     carryforward of approximately $37,000,000 to reduce future taxable
     income.  These operating losses expire at various dates through
     2,012.

     The following summarizes the temporary differences of the Company
     at December 31, 1997 at the current statutory rate:
     

<TABLE>
<S>                                                         <C>
     Deferred tax asset:
        Net operating loss carryforward                     $ 13,690,000
        Adjustments to reduce land to           
          net realizable value                                    12,000
        Expenses capitalized under IRC 263(a)                     56,000
        ITC carryforward                                         215,000
        Valuation allowance                                  (11,510,000)
                                                            ------------
                                                               2,463,000
                                                            ------------
      Deferred tax liability                                
        Basis difference of land and
          improvement inventories                              2,453,000
        Excess tax over book depreciation                         10,000
                                                            ------------
                                                               2,463,000
                                                            ------------
        Net deferred tax asset                              $          0
                                                            ============
</TABLE>


                                   11

<PAGE>
<PAGE>
                     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. 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. The sale of this undeveloped land occurred on May 13, 1998,
its remaining inventory now consists of undeveloped commercial property.
The Company intends to make a decision as to 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 was owned by the Company, and 350 acres was owned by L-PGI.

     Shareholder approval of the sale of the property was obtained at the
Annual Meeting of the Company on December 22, 1997.  The Company
consummated the transaction on May 13, 1998.

Results of Operations

     Revenues for the first nine months of 1998 increased  by $14.5
million to $14.9 million from $435,000 for the comparable 1997 period
due to the sale of approximately 4,890 acres on May 13, 1998.  A net
gain of $4.1 million was realized for the first nine months of 1998
compared to a net loss of $2,515,000 for the first nine months of 1997. 
After consideration of cumulative preferred dividends in arrears,
totaling $480,000 for each of the nine months ended September 30, 1998
and 1997 ($.15 per share of common stock), net income (loss) per share
of $.69 and $(.69), respectively, were reported for the nine month
periods ended September 30, 1998 and 1997.

                                 12
<PAGE>
<PAGE>
                     PGI INCORPORATED AND SUBSIDIARIES

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

   On March 28, 1996, the Company's primary lender, First Union National
Bank of Florida, a national banking association ("First Union") assigned
to PGIP 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 sale of acreage on May 13, 1998 resulted in a payment of first
mortgage principal and interest to PGIP of $10,362,193.  At closing, the
Company and PGIP executed an escrow agreement (the "Escrow Agreement"). 
The Escrow Agreement provides that $1,000,000 of the PGI Purchase Price
would not be used to repay the First Mortgage Indebtedness, so that
$1,000,000 (the "Remaining Indebtedness") of the First Mortgage
Indebtedness would remain in place.  The $1,000,000 was placed in escrow
with PGIP as the escrow agent.  Pursuant to the Escrow Agreement, the
escrowed funds are to be paid out (i) as requested by PGI and agreed to
by PGIP, or (ii) as deemed necessary and appropriate by PGIP, in either
case, to protect PGIP's interest in the Retained Acreage (as hereinafter
defined), including PGIP's right to receive principal and interest under
the First Mortgage securing the Remaining Indebtedness, or (iii) to PGIP
to pay any other obligations owed to PGIP by the Company.  The real
estate owned by the Company which was not sold to the Purchaser
(approximately 370 acres) (the "Retained Acreage") remains subject to
the First Mortgage.

Real Estate Sales and Cost of Sales consisted of:

<TABLE>
<CAPTION>

                                       Three Months Ended          Nine Months Ended
                                    ------------------------    ------------------------
                                    Sept. 30,      Sept. 30,    Sept. 30,      Sept. 30,
                                      1998           1997         1998           1997
                                    ---------      ---------    ---------      ---------
                                        ($ in thousands)            ($ in thousands)
<S>                                    <C>           <C>         <C>             <C>

      Sales:
          Homesite Sales               $28              -        $    28         $  -
          Acreage Sales                  -                        13,447            -          
                                       ---           ----        -------         ----         
                                        28              -        $13,475         $  -
                                       ===           ====        =======         ====         
   Cost of Sales:                                                       
           Homesite Sales              $ 5                             5
           Acreage Sales                 -           $  -          8,427         $  -      
                                       ---           ----        -------         ----         
                                       $ 5                       $ 8,432
                                       ===           ====        =======         ====         
</TABLE>

Other income consisted of:
<TABLE>
<CAPTION>
                                       Three Months Ended          Nine Months Ended
                                    ------------------------    ------------------------
                                    Sept. 30,      Sept. 30,    Sept. 30,      Sept. 30,
                                      1998           1997         1998           1997
                                    ---------      ---------    ---------      ---------
                                        ($ in thousands)            ($ in thousands)
<S>                                    <C>           <C>         <C>             <C>
      Commission income               $ 80           $ 91         $  247         $292
      Reduction of previously
        accrued property taxes           -              -            248            -
      Debt release settlement            -              -            870            -
      Other income                      60             46             96          120
                                      ----           ----         ------         ----
                                      $140           $137         $1,461         $412
                                      ====           ====         ======         ====
</TABLE>

                                   13<PAGE>
<PAGE>
                     PGI INCORPORATED AND SUBSIDIARIES

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

     The stock of Sugarmill Woods Sales, Inc., a subsidiary of
Sugarmill Woods Inc. was sold September 15, 1998 to the president of
Sugarmill Woods Sales, Inc. for a price of $25,000.  Assets at the time
of sale included the personal property, escrows and rental contracts of
the entity.  A promissory note for $24,000 was taken back by Sugarmill
Woods, Inc. secured by a lien on the stock being purchased and evidenced
by a security agreement.  The company realized a gain of $18,000 on this
transaction.

     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's management closed on the
sale of its undeveloped land in Citrus County on May 13, 1998.

     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
Septmeber 30, 1998 was $7.7 million compared to cash used of $59,000 for
the comparable 1997 period due to the bulk acreage sale in the second
quarter of 1998.  During the first nine months of 1998, financing
activities used $7.5 million in cash flow with $31,000 in proceeds from
borrowings.  Net cash used in financing activities was primary lender
for debt repayment as well as repayments of other notes and mortgages
payable.

Analysis of Financial Condition

     Assets totaled $3.32 million at September 30, 1998 compared to
$11.13 million at December 31, 1997, reflecting the following changes:

<TABLE>
<CAPTION>

                                   Sept. 30,       Dec. 31,     Increase
                                     1998           1997       (Decrease)
                                   ---------       --------    ----------
                                              ($ in thousands)
<S>                                 <C>           <C>           <C>
Cash and Cash Equivalents           $  181        $     2       $   179
Restricted Cash                      1,936          1,173           763
Receivables                            153            184           (31)
Land and improvement inventories       889          8,992        (8,103)
Net property and equipment               1             18           (17)
Other assets                           158            759          (601)
                                    ------        -------       -------
                                    $3,318        $11,128       $(7,810)
                                    ======        =======       =======
</TABLE>


     Liabilities were $25.0 million at September 30, 1998 compared to
$37.0 million at December 31, 1997, reflecting the following changes
among categories.

                                   14
<PAGE>
<PAGE>
                     PGI INCORPORATED AND SUBSIDIARIES


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

<TABLE>
<CAPTION>
                                                  Sept. 30,      Dec. 31,       Increase
                                                    1998          1997         (Decrease)
                                                  ---------      --------      ----------
                                                            ($ in thousands)
<S>                                               <C>            <C>           <C>                                           
      Accounts payable                            $    12        $   285       $   (273)
      Other liabilities                             1,305          1,727           (422)
      Accrued interest                             10,969         13,328         (2,359)
      Credit agreements - primary lender            1,000          7,344         (6,344)
      Notes and mortgages payable                   1,198          3,750         (2,552)
      Convertible subordinated
        debentures payable                          9,059          9,059              -
      Convertible debentures payable                1,500          1,500              -
                                                  -------        -------       --------
                                                  $25,043        $36,993       $(11,950)
                                                  =======        =======       ========
</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, 1998
                                                                 -----------------------
                                                                 Principal       Unpaid
                                                                 Amount Due     Interest
                                                                 ----------     --------
                                                                    ($ in thousands)
<S>                                                               <C>            <C>
      Convertible subordinated debentures due June 1, 1991        $1,034         $  593
      
      Convertible subordinated debentures due May 1, 1992          8,025          5,019
                                                                  ------         ------
                                                                  $9,059         $5,612
                                                                  ======         ======
</TABLE>

     The Company does not have funds available to make any payments of
either principal or interest on the above debentures.


                                   15


<PAGE>
<PAGE>
                     PGI INCORPORATED AND SUBSIDIARIES

PART II  Other Information

Item 1   Legal Proceedings

   In 1994, the Citrus County Tax Assessor 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 Assessor again denied agricultural exemption status
for the undeveloped Sugarmill Woods property, but was overruled by the
Value Adjustment Board.  As a result, the Tax Assessor sued Sugarmill
Woods, and was again successful in denying the agricultural exemption
for the property.  The Company won on appeal, but the Tax Assessor
appealed to the Supreme Court of Florida to reinstate the exemption.  At
this time the outcome of the appeal cannot be determined.  At the
closing of the bulk acreage sale a restricted escrow was established in
the amount of $557,000 for payment of the taxes upon settlement of the
litigation.


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, 1998.

                                   16
<PAGE>
<PAGE>
               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, 1998           /s/Laurence A. Schiffer
     -----------------------       ---------------------------     
                                   Laurence A. Schiffer
                                   President

                                   17
<PAGE>
<PAGE>
                     PGI INCORPORATED AND SUBSIDIARIES

EXHIBIT INDEX
-------------



 2.     Inapplicable.

 3.1    Restated Articles of Incorporation of PGI, Inc. executed 
        September 4, 1998 with certificate from the State of Florida
        dated October 27, 1998

 3.2    Inapplicable.

 4.     Inapplicable.

10.     Inapplicable.

11.     Statements re:  Computations of Per Share Earnings.
        (See Note 3 to the consolidated financial statements.)             
     
15.     Inapplicable.

18.     Inapplicable.

19.     Inapplicable.

22.     Inapplicable.

23.     Inapplicable.

24.     Inapplicable.

27.     Financial Data Schedule

                                   18