<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              March 31, 1997
                                       ---------------------------------------

                                      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 May 14, 1997
there were 3,317,555 shares of the Registrant's common stock outstanding.

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

                                    -1-
<PAGE> 2

<TABLE>
                             PGI INCORPORATED AND SUBSIDIARIES
                                        FORM 10-QSB
                           For the Quarter Ended March 31, 1997

                                    Table of Contents

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

<CAPTION>
                                                                    Form 10-QSB
                                                                      Page No.
                                                                    -----------

<C>           <S>                                                     <C>
PART I        Financial Information

   Item 1       Financial Statements
                Consolidated Statements of Financial Position
                   March 31, 1997 and December 31, 1996                  3
                Consolidated Statements of Operations
                   Three Months Ended March 31, 1997 and 1996            4
                Condensed Consolidated Statements of Cash Flows
                   Three Months Ended March 31, 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

<TABLE>
                                 PGI INCORPORATED AND SUBSIDIARIES


PART I        Financial Information

   Item 1     Financial Statements

                           CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                          ($ in thousands)
<CAPTION>
                                                         March 31,      December 31,
                                                           1997            1996
                                                        -----------     ------------
                                                        (unaudited)
<S>                                                      <C>            <C>
ASSETS
   Cash, including restricted cash of $1,147,000
        and $1,140,000                                   $    1,157     $    1,152
     Receivables on real estate sales - net                     226            318
     Other receivables                                           29             26
     Land and improvement inventories                         9,012          9,016
     Property and equipment - net                                27             46
     Other assets                                               755            759
                                                         ----------     ----------
                                                         $   11,206     $   11,317
                                                         ==========     ==========

LIABILITIES
     Accounts payable                                    $      106     $       78
     Other liabilities                                        1,456          1,428
     Accrued interest:
        Primary lender                                        2,703          2,461
        Debentures                                            7,208          6,880
        Other                                                 1,491          1,449
     Credit agreements -
        Primary lender                                        7,323          7,307
     Notes and mortgages payable                              3,659          3,667
     Convertible subordinated
        debentures payable                                    9,059          9,059
     Convertible debentures payable                           1,500          1,500
                                                         ----------     ----------

                                                             34,505         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; 3,317,555 shares
        issued and outstanding                                  332            332
     Paid in capital                                         13,698         13,698
     Accumulated deficit                                    (39,329)       (38,542)
                                                         ----------     ----------

                                                            (23,299)       (22,512)
                                                         ----------     ----------

                                                         $   11,206     $   11,317
                                                         ==========     ==========


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

                                    -3-
<PAGE> 4

<TABLE>
                           PGI INCORPORATED AND SUBSIDIARIES



PART I        Financial Information (Continued)

                         CONSOLIDATED STATEMENTS OF OPERATIONS
                                   ($ in thousands)
                                     (Unaudited)
<CAPTION>
                                                    Three Months Ended
                                                  ---------------------
                                                   March 31,   March 31,
                                                     1997        1996
                                                  ---------   ---------
<S>                                               <C>         <C>
REVENUES
     Interest income                                     11          30
     Other income                                       134          92
                                                  ---------   ---------
                                                        145         122
                                                  ---------   ---------

COSTS AND EXPENSES
     Selling expenses                                     2           6
     General & administrative expenses                  150         104
     Interest                                           654         573
     Other expenses                                     126          99
                                                  ---------   ---------
                                                        932         782
                                                  ---------   ---------

NET INCOME (LOSS)                                 $    (787)  $    (660)
                                                  =========   =========
NET INCOME (LOSS) PER SHARE (<F*>)
     Primary and fully diluted                    $    (.29)  $    (.25)
                                                  =========   =========
<FN>
(<F*>)  Considers the effect of cumulative preferred dividends in arrears for
the three  months ended March 31, 1997 and 1996.




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

                                    -4-
<PAGE> 5

<TABLE>
                            PGI INCORPORATED AND SUBSIDIARIES


PART I        Financial Information (Continued)

                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    ($ in thousands)
                                       (Unaudited)
<CAPTION>
                                                             Three Months Ended
                                                        ----------------------------
                                                          March 31,      March 31,
                                                            1997           1996
                                                         -----------    ----------
<S>                                                      <C>            <C>
Net cash provided by (used in) operating activities      $       (3)    $     113
                                                         ----------     ---------

Cash flows from financing activities:
     Proceeds from borrowings                                    67             -
     Principal payments on debt                                 (59)         (148)
                                                         ----------     ---------
     Net cash provided by (used in) financial activities          8          (148)
                                                         ----------     ---------

Net increase (decrease) in cash                                   5           (35)

Cash at beginning of period                                   1,152         1,165
                                                         ----------     ---------

Cash at end of period                                    $    1,157     $   1,130
                                                         ==========     =========
</TABLE>

                                    -5-
<PAGE> 6


                       PGI INCORPORATED AND SUBSIDIARIES



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

                  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, 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 10-KSB, the
     Company's management is seeking purchasers for its remaining
     undeveloped land.

     The financial statements do not include any adjustments relating to
     the recoverability of recorded asset amounts or the amounts of
     liabilities that might be necessary should the Company be
     unsuccessful in its sales 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 months
     ended March 31, 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

            Notes to Consolidated Financial Statements (continued)


(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 three months ended March 31, 1997 and 1996.
     The average number of common shares outstanding for the three months
     ended March 31, 1997 and 1996 was 3,317,555, respectively.

     Fully diluted per share amounts are computed by dividing net income
     (loss) by the average number of common shares outstanding, after
     adjusting both for the estimated effects of the assumed exercise of
     stock options and the assumed conversion of all cumulative
     convertible preferred stock, convertible subordinated debentures and
     collateralized convertible debentures into shares of common stock.
     For the three months ended March 31, 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 anti-dilutive.

(4)  Statement of Cash Flows

     The Financial Accounting Standards Board issued Statement No. 95,
     "Statement of Cash Flows", which requires a statement of cash flows
     as part of a full set of financial statements.  For quarterly
     reporting purposes, the Company has elected to condense the reporting
     of its net cash flows.  Interest paid for the three months ended
     March 31, 1997 and 1996 was $42,000 and $53,000, respectively.

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

(5)  Restricted Cash

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

                                    -7-
<PAGE> 8

                      PGI INCORPORATED AND SUBSIDIARIES

            Notes to Consolidated Financial Statements (continued)



(6)  Receivables on Real Estate Sales

     Net receivables on real estate sales consisted of:

<TABLE>
<CAPTION>
                                                    March 31,    December 31,
                                                      1997           1996
                                                   ----------    ------------
                                                        ($ in thousands)
<S>                                                <C>           <C>
     Contracts receivable on homesite sales        $      984    $    1,076
     Other                                                 96            98
                                                   ----------    ----------
                                                        1,080         1,174
     Less:  Allowance for cancellations                  (806)         (806)
            Unamortized valuation discount                (48)          (50)
                                                   ----------    ----------
                                                   $      226    $      318
                                                   ==========    ==========
</TABLE>

(7)  Land and Improvements

     Land and improvement inventories consisted of:

<TABLE>
<CAPTION>
                                                    March 31,    December 31,
                                                      1997           1996
                                                   ----------    ------------
                                                        ($ in thousands)
<S>                                                <C>           <C>
     Unimproved land                               $    8,724     $    8,724
     Fully improved land                                  288            292
                                                   ----------     ----------
                                                   $    9,012     $    9,016
                                                   ==========     ==========
</TABLE>

(8)  Property and Equipment

     Property and equipment consisted of:

<TABLE>
<CAPTION>
                                                    March 31,    December 31,
                                                      1997           1996
                                                   ----------    ------------
                                                        ($ in thousands)
<S>                                                <C>           <C>
     Furniture, fixtures and other equipment       $      211     $      363
     Less:  Accumulated depreciation                     (184)          (317)
                                                   ----------     ----------
                                                   $       27     $       46
                                                   ==========     ==========
</TABLE>

(9)    Other Assets

     Other assets consisted of:

<TABLE>
<CAPTION>
                                                    March 31,    December 31,
                                                      1997           1996
                                                   ----------    ------------
                                                        ($ in thousands)
<S>                                                <C>           <C>
     Guaranteed future connections related to
        sale of utility plants and equipment, net  $      621     $      621
     Deposit with Trustee of 6-1/2% debentures            126            125
     Other                                                  8             13
                                                   ----------     ----------
                                                   $      755     $      759
                                                   ==========     ==========
</TABLE>

                                    -8-
<PAGE> 9

                      PGI INCORPORATED AND SUBSIDIARIES

            Notes to Consolidated Financial Statements (continued)



(10)    Other Liabilities

     Other Liabilities consisted of:

<TABLE>
<CAPTION>
                                                    March 31,    December 31,
                                                      1997           1996
                                                   ----------    ------------
                                                        ($ in thousands)
<S>                                                <C>           <C>
     Accrued property taxes
        - current                                  $      260     $       208
        - delinquent                                      476             476
     Other accrued expenses                               293             316
     Deposits, advances and escrows                       345             346
     Estimated recourse liability for
        receivables sold                                   66              66
     Other                                                 16              16
                                                   ----------     -----------
                                                   $    1,456     $     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>
                                                    March 31,    December 31,
                                                      1997           1996
                                                   ----------    ------------
                                                        ($ in thousands)
<S>                                                <C>           <C>
     Credit agreements - primary lender:
        (maturing July 8, 1997, bearing interest
          at prime plus 5%):                       $    7,323     $     7,307

     Notes and mortgages payable - $1,326,000
        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             3,659           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 shares of common stock
       at $1.72 per share                               1,500           1,500
                                                   ----------     -----------
                                                   $   21,541     $    21,533
                                                   ==========     ===========
</TABLE>

                                    -9-
<PAGE> 10

                      PGI INCORPORATED AND SUBSIDIARIES

            Notes to Consolidated Financial Statements (continued)



(12) Real Estate Sales and Other Income

     There were no real estate sales for the three months ended March 31,
     1997 and 1996.

     Other income for the three months ended March 31, 1997 and 1996
     consisted of:

<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                        ----------------------------
                                                          March 31,      March 31,
                                                            1997           1996
                                                         -----------    ----------
                                                             ($ in thousands)
<S>                                                      <C>            <C>
     Commission income                                   $     102      $      78
        Other income                                            32             14
                                                         ---------      ---------
                                                         $     134      $      92
                                                         =========      =========
</TABLE>
(13) Commitments and Contingencies

     The aggregate outstanding balances of all receivables sold and
     exchanged with recourse totaled $190,000 and $246,000 at March 31,
     1997 and December 31, 1996, respectively.  Based on its collection
     experience with such receivables, the Company maintained allowances
     at both March 31, 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

            Notes to Consolidated Financial Statements (continued)

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

Preliminary Note

   The description of the Company's business in the Quarterly Report on Form
10-QSB focuses on its traditional core business of selling individual homes
and homesites and the construction of residences.  Readers should understand
as they read the report, however, that the Company is not presently pursuing
its core business 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.

Results of Operations

   Revenues for the first three months of 1997 increased by $23,000 to
$145,000 from $122,000 for the comparable 1996 period.  A net loss of
$787,000 was incurred for the first three months of 1997 compared to a net
loss of $660,000 for the first three months of 1996.  After consideration of
cumulative preferred dividends in arrears, totaling $160,000 for each of the
three months ended March 31, 1997 and 1996 ($.05 per share of common stock),
net losses per share of $.29 and $.25, respectively, were reported for the
three month periods ended March 31, 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

            Notes to Consolidated Financial Statements (continued)

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

   The Company has been advised by PGIP that it will be the policy of PGIP
not to proceed with collection of the principal and interest evidenced and
secured by the Loan Documents so long as PGI pursues satisfactory efforts to
market and sell the Property.  PGIP's policy, but not its contractual
obligation, will be to facilitate sales of the Property by agreeing to the
release of Property to be sold from the lien of the Loan Documents against
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.

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

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

     There were no real estate sales for the three months ended March 31,
1997 and 1996.

     Other income for the three months ended March 31, 1997 and 1996
consisted of:

<TABLE>
<CAPTION>
                                                    Three Months Ended
                                                   -------------------

                                                   March 31,   March 31,
                                                      1997        1996
                                                   ---------   ---------
                                                     ($ in thousands)
<S>                                                <C>         <C>
     Commission income                             $    102    $      78
     Other income                                        32           14
                                                   --------    ---------
                                                   $    134    $      92
                                                   ========    =========
</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 non-recourse sale of receivables,
all previously deferred profits were recognized during 1992.

     Cash used in operating activities for the three months ended March 31,
1997 was $3,000 compared to $113,000 cash provided by operating activities
for the comparable

                                    -12-
<PAGE> 13

                      PGI INCORPORATED AND SUBSIDIARIES


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


1996 period.  During the first three months of 1997, financing activities
provided  $8,000 in cash flow with $67,000 in proceeds from borrowings.  Net
cash used in financing activities was $59,000 for normal debt repayment as
compared to $148,000 for the same period in 1996.

Analysis of Financial Condition

     Assets totaled $11.2 million at March 31, 1997 compared to $11.3 million
at December 31, 1996, reflecting the following changes:

<TABLE>
<CAPTION>
                                             March 31,   December 31,   Increase
                                               1997         1996       (Decrease)
                                            ---------   ------------   ----------
                                                       ($ in thousands)

<S>                                         <C>         <C>            <C>
     Cash                                   $    1,157  $    1,152     $     5
     Receivables                                   255         344         (89)
     Land and improvement inventories            9,012       9,016          (4)
     Net property and equipment                     27          46         (19)
     Other assets                                  755         759          (4)
                                            ----------  ----------     --------
                                            $   11,206  $   11,317     $   (111)
                                            ==========  ==========     ========
</TABLE>

                                    -13-
<PAGE> 14


                      PGI INCORPORATED AND SUBSIDIARIES


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

   Liabilities were $34.5 million at March 31, 1997 compared to $33.8 million
at December 31, 1996, reflecting the following changes among categories.

<TABLE>
<CAPTION>
                                             March 31,   December 31,   Increase
                                               1997         1996       (Decrease)
                                            ---------   ------------   ----------
                                                       ($ in thousands)

<S>                                         <C>         <C>            <C>
     Accounts payable                       $      106  $       78     $    28
     Other liabilities                           1,456       1,428          28
     Accrued interest                           11,402      10,790         612
     Credit agreements - primary lender          7,323       7,307          16
     Notes and mortgages payable                 3,659       3,667          (8)
     Convertible subordinated
       debentures payable                        9,059       9,059           -
     Convertible debentures payable              1,500       1,500           -
                                            ----------  ----------     -------
                                            $   34,505  $   33,829     $   676
                                            ==========  ==========     =======
</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>
                                                               March 31, 1997
                                                           ----------------------
                                                           Principal     Unpaid
                                                           Amount Due    Interest
                                                           ----------   ---------
                                                               ($ in thousands)
<S>                                                        <C>          <C>
     Convertible subordinated debentures due June 1, 1991  $    1,034   $     486
     Convertible subordinated debentures due May 1, 1992        8,025       3,975
                                                           ----------   ---------
                                                           $    9,059   $   4,461
                                                           ==========   =========
</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

              Not applicable.


Item 2        Changes in Securities

              Not applicable.


Item 3        Defaults Upon Senior Securities

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


Item 4        Submission of Matters to a Vote of Security Holders

              Not applicable.


Item 5        Other Information

              Not applicable.


Item 6        Exhibits and Reports on Form 8-K

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

   (c)  No report on Form 8-K was filed during the quarter ended March 31,
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:        May 15, 1997                    /s/Laurence A. Schiffer
    ---------------------------------        ---------------------------------
                                             Laurence A. Schiffer
                                             President


                                    -16-
<PAGE> 17

                        PGI INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>

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