# EDGAR Filing Document

**Accession Number:** 0000081157
**File Stem:** 0001654954-23-004006
**Filing Date:** 2023-3
**Character Count:** 103065
**Document Hash:** 4337727a9c48e6106f5d18142a48316e
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001654954-23-004006.hdr.sgml**: 20230331

**ACCESSION NUMBER**: 0001654954-23-004006

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 71

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230331

**DATE AS OF CHANGE**: 20230331

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** PGI INC
- **CENTRAL INDEX KEY:** 0000081157
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE [6500]
- **IRS NUMBER:** 590867335
- **STATE OF INCORPORATION:** FL
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-06471
- **FILM NUMBER:** 23784105

**BUSINESS ADDRESS:**
- **STREET 1:** 212 SOUTH CENTRAL
- **STREET 2:** SUITE 100
- **CITY:** ST LOUIS
- **STATE:** MO
- **ZIP:** 63105
- **BUSINESS PHONE:** 3145128650

**MAIL ADDRESS:**
- **STREET 1:** 212 SOUTH CENTRAL
- **STREET 2:** SUITE 100
- **CITY:** ST LOUIS
- **STATE:** MO
- **ZIP:** 63105

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** PUNTA GORDA ISLES INC
- **DATE OF NAME CHANGE:** 19900403

?xml version="1.0" encoding="utf-8"?pgai_10k.htm

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-K**

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended <u>**December 31, 2022 FINAL**</u>

☐ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to _____________________

Commission File Number <u>**1-6471**</u>

---

| |
|:---|
| **PGI INCORPORATED** |
| (Exact name of registrant as specified in its charter) |

---

---

| | |
|:---|:---|
| **Florida** | **59-0867335** |
| (State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |

---

<u>**212 SOUTH CENTRAL, ST. LOUIS, Missouri 63105**</u>

(Address of principal executive offices)

<u>**(314) 512-8650**</u>

(Issuer's telephone number)

Securities registered pursuant to section 12(b) of the Act: **None**

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol** | **Name of each exchange on which registered** |

---

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

Common Stock, Par Value $.10 per share

6.0% Convertible Subordinated Debentures due 1992

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated Filer | ☒ | Smaller reporting company | ☒ |
|  |  | Emerging growth company | ☐ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2022 cannot be determined. See Item 5 of Form 10-K.

The number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:

As of March 31, 2023, 5,317,758 shares of Common Stock, par value $.10 per share, were outstanding.

PGI INCORPORATED AND SUBSIDIARIES

FORM 10 – K - 2022

Contents and Cross Reference Index

---

| | | | |
|:---|:---|:---|:---|
| Part No. | Item No. | Description | Form 10-K<br>Page No. |
| [I](#a1) | [1](#a2) | [Business](#a2) | 3 |
|  | [1A](#a3) | [Risk Factors](#a3) | 4 |
|  | [1B](#a4) | [Unresolved Staff Comments](#a4) | 4 |
|  | [2](#a5) | [Properties](#a5) | 4 |
|  | [3](#a6) | [Legal Proceedings](#a6) | 4 |
|  | [4](#a7) | [Mine Safety Disclosures](#a7) | 4 |
| [II](#a8) | [5](#a9) | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#a9) | 5 |
|  | [6](#a10) | [Selected Financial Data](#a10) | 5 |
|  | [7](#a11) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#a11) | 6 |
|  | [7A](#a12) | [Quantitative and Qualitative Disclosures About Market Risk](#a12) | 12 |
|  | [8](#a13) | [Financial Statements and Supplementary Data](#a13) | 13 |
|  | [9](#a14) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#a14) | 32 |
|  | [9A](#a15) | [Controls and Procedures](#a15) | 32 |
|  | [9B](#a16) | [Other Information](#a16)  | 33 |
| [III](#a17) | [10](#a18) | [Directors, Executive Officers and Corporate Governance](#a18) | 34 |
|  | [11](#a19) | [Executive Compensation](#a19) | 35 |
|  | [12](#a20) | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#a20) | 35 |
|  | [13](#a21) | [Certain Relationships and Related Transactions, and Director Independence](#a21) | 36 |
|  | [14](#a22) | [Principal Accountant Fees and Services](#a22) | 39 |
| [IV](#a23) | [15](#a24) | [Exhibits and Financial Statement Schedules](#a24) | 40 |
|  | [16](#a25) | [Form 10-K Summary](#a25) | 42 |
| [Signatures](#a26) | [Signatures](#a26) | [Signatures](#a26) | 43 |

---

---

| |
|:---|
| 2 |
| *[**Table of Contents**](#TOCMF)* |

---

<u>PART I</u>

<u>Item 1. Business</u>

GENERAL

As used in this Annual Report on Form 10-K, the "Company" or "PGI" refers, unless the context otherwise requires, to PGI Incorporated and its subsidiaries.

This is a final SEC filing for PGI. Effective December 21, 2022, the Officers and Directors of PGI executed a Resolution to cease operations and allow the dissolution and wind up of the affairs of the Company.

The Company, a Florida corporation, was founded in 1958, and up until the mid 1990's was in the business of building and selling homes, developing and selling home sites and selling undeveloped or partially developed tracts of land. Over approximately the last 30 years, the Company's business focus has concentrated on its sales of its remaining real estate. This change was prompted by its continuing financial difficulties due to the principal and interest owed on its debt.

For many years, the Company's independent accountants and management stated in its SEC filings that there was substantial doubt about the Company's ability to continue as a going concern. PGI has been filing as an Inactive Registrant since 2019 when the Board of Directors of PGI concluded that PGI met all of the conditions of an "Inactive Entity" as that term is defined in Rule 3-11 of Regulation S-X and is further contemplated in the Securities and Exchange Commission's Division of Corporation Finance's Financial Reporting Manual section 1320.2. Accordingly, the financial statements have been unaudited.

The Company has been administratively dissolved by the Florida Secretary of State for the 2022 calendar year. During 2022, two single family lots were sold and Sugarmill Woods Inc. ("Sugarmill Woods") realized approximately $39,000. The costs of continued operations, including insurance, administrative expenses, SEC filings, tax return preparation and filing, and other expenses of the Company exceed any income to which the Company is or reasonably could be entitled. The net cash used in operating activities for the year ended December 31, 2022 was $51,000 and $23,000 was used during the year ended December 31, 2021.

With the December 21, 2022 Resolution, the Board approved the sale of the Company's last remaining parcel of value for a purchase price of $200,000, consistent with the offer in a sale transaction which failed earlier in the year. The parcel was sold to Love Investment Company ("LIC"), the primary preferred shareholder of PGI. Further, the Resolution approved the payment of the proceeds of the sale in full settlement of the remaining aggregate balance of accrued interest of the Convertible Secured Debentures of $52,709,836, held by LIC and Love-1989 Florida Partners L.P.,("Love-1989") an affiliate of LIC in proportion to their respective outstanding balances.

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| 3 |
| *[**Table of Contents**](#TOCMF)* |

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<u>Item 1. Business (continued)</u>

The Company's remaining land inventory consisting of minor parcels of real estate available for tax sale. It consists of easements in Citrus County, Florida, and 12 parcels of real estate in Charlotte County, Florida, which total approximately 58 acres. The parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale. The real estate taxes for the remaining parcels are delinquent.

AVAILABLE INFORMATION

The Company has filed annual and quarterly reports (including any exhibits or amendments to those reports) and other information with the SEC. These materials may also be accessed through the SEC's website (www.sec.gov).

OTHER

As of December 31, 2022, the Company had no employees, and all services that have been provided to the Company were through contract services.

The Company's website address is www.pgiincorporated.com. Information included on our website does not constitute part of this document.

<u>Item 1A. Risk Factors</u>

Not Applicable

<u>Item 1B. Unresolved Staff Comments</u>

Not Applicable

<u>Item 2. Properties</u>

The Company's remaining land inventory consists of minor parcels of real estate available for tax sale. It consists of some minor easements in Citrus County, Florida, which are owned through its wholly owned subsidiary, Sugarmill Woods. In addition, the Company owns 12 parcels of real estate in Charlotte County, Florida, which total approximately 58 acres held through Punta Gorda Isles Sales, Inc. ("PGIS"), a wholly owned subsidiary of the Company. These parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale. The real estate taxes for the remaining parcels are delinquent.

<u>Item 3. Legal Proceedings</u>

There are no legal proceedings.

<u>Item 4. Mine Safety Disclosures</u>

Not Applicable

---

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|:---|
| 4 |
| *[**Table of Contents**](#TOCMF)* |

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PART II

<u>Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.</u>

There is no public trading market for the Company's common equity securities. There have been no reported transactions in the Company's common stock, par value $.10 (the "Common Stock"), since January 29, 1991, with the exception of the odd lot tender offer by PGIP LLC ("PGIP"), an affiliate of the Company, in 2003 which was described previously in the Company's annual report on Form 10-KSB for the fiscal year ended December 31, 2004 and the 2,260,706 shares of Common Stock assigned by Love-PGI Partners, L.P. ("L-PGI") to LIC, an affiliate of L-PGI, effective December 31, 2016.

There were also a small number of over-the-counter quotations, obtained from www.otcmarkets.com, in 2017 and 2016 which were described previously in the Company's annual reports on Form 10-K for the fiscal years ended December 31, 2017 and December 31, 2016. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

No dividends have ever been paid on the Common Stock, and payment of dividends on the Common Stock is restricted under the terms of the two indentures (one of which matured on June 1, 1991 and the other on May 1, 1992) pursuant to which the Company's outstanding subordinated convertible debentures were issued and by the terms of the Company's preferred stock. As of December 31, 2022, to the Company's knowledge, there were 539 holders of record of the Company's Common Stock and 317 debenture holders.

<u>Item 6. Selected Financial Data</u>

Not Applicable

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| 5 |
| *[**Table of Contents**](#TOCMF)* |

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<u>Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations</u>

LIQUIDITY AND CAPITAL RESOURCES

Effective December 21, 2022, the Officers and Directors of PGI executed a Resolution to cease operations and allow the dissolution and wind up of the affairs of the Company.

The Resolution approved the sale of the Company's last remaining parcel of value to LIC, a Missouri Corporation, as well as the Company's primary preferred shareholder. The parcel is approximately seven acres located in Citrus County, Florida and was judged to be a "contaminated site" in May 1995 by the Florida Department of Environmental Protection ("FDEP"). After years of clean-up activities by the Company, the FDEP advised in its May 8, 2020 Conditional Site Rehabilitation Completion Order that the Company had satisfied the rehabilitation requirements. During 2022 and 2021, the Company had marketed the parcel. During 2022, several unsuccessful third-party transactions indicated the parcel had a value of no more than $200,000. There were no pending third party offers or apparent opportunities for sale.

The Board accepted the LIC offer to purchase the respective seven-acre parcel for a purchase price of $200,000, consistent with the offer in the most recent failed sale transaction.

The Resolution further approves the proceeds of the sale of the Citrus County Parcel to be paid in full settlement of the remaining aggregate balance of accrued interest of the Convertible Secured Debentures of $52,709,836 held by LIC and Love-1989, a Missouri limited partnership, an affiliate of LIC, in proportion to their respective outstanding balances.

For many years, the Company's independent accountants and management stated in its SEC filings that there was substantial doubt about the Company's ability to continue as a going concern. In early 2019, the Board of Directors of PGI concluded that PGI met and continued to meet all conditions under which a registrant may be deemed an "Inactive Entity" as that term is defined or contemplated in Rule 3-11 of Regulation S-X.

The Company has been administratively dissolved by the Florida Secretary of State for the 2022 calendar year. The costs of continued operations, including insurance, administrative expenses, SEC filings, tax return preparation and filing, and other expenses of the Company exceed any income to which the Company is or reasonably could be entitled.

The Company's remaining land inventory is available for tax sale. The remaining landholdings consist of minor easements in Citrus County, Florida, which are owned through its wholly owned subsidiary, Sugarmill Woods. In addition, the Company, owns 12 parcels of real estate in Charlotte County, Florida, held through PGIS, a wholly owned subsidiary, which totals approximately 58 acres. These parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale. The real estate taxes for the remaining parcels are delinquent.

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| 6 |
| *[**Table of Contents**](#TOCMF)* |

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<u>Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)</u>

The Company's historical financial statement indebtedness has included its 6% subordinated convertible debentures which matured in May, 1992, with a remaining face amount of $8,025,000; and various notes payable, with a remaining face amount of $1,198,000. The Company has recorded forgiveness of debt and interest for the entire balance of its outstanding debt.

The Company has been party to an agreement relating to the 6% subordinated convertible debentures, with Deutsch Bank Trust Company Americas (formerly known as Bankers Trust Company) as trustee pursuant to that certain Indenture dated May 1, 1972 ("the Indenture"), as to which Indenture the Company executed a certain Tolling Agreement dated April 15, 1998 for the purpose of tolling the application of the statute of limitations to said Indenture and the Company thereafter executed twenty-four (24) separate annual amendments to said tolling agreement such that the current Termination Date thereof is May 1, 2023. The Company will not execute any further tolling agreements with regard to the Indenture.

RESULTS OF OPERATIONS

<u>Revenues</u>

Revenues for the year ended December 31, 2022 include $96,399,000 in forgiveness of debt and interest revenue due to the dissolution of the Company effective with the December 21, 2022 Resolution executed by the Officers and Directors of the Company. Consequently, revenues increased by $96,544,000 to $96,638,000 compared to revenues of $94,000 for the year ended December 31, 2021. In addition, there was an increase in real estate sales of $149,000 in 2022. Other income decreased by $4,000 in 2022 compared to 2021 as there was no other income in the year ended December 31, 2022. Other income in 2021 represents income from a settlement claim from over 30 years ago when the Company was operating as a home builder.

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| *[**Table of Contents**](#TOCMF)* |

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<u>Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)</u>

The Company recognized forgiveness of debt and interest expense for the year ended December 31, 2022 as follows:

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| | | | |
|:---|:---|:---|:---|
|  | Forgiveness<br>of Debt | Forgiveness<br>of Interest | <br>Total |
|  | ($ in thousands) | ($ in thousands) | ($ in thousands) |
| Notes Payable (Note 6) | $1198 | $3593 | $4791 |
| Subordinated convertible debentures (Note 7) | 8025 | 30915 | 38940 |
| Convertible debentures related party (Note 8) |  | 52510 | 52510 |
| Accrued expenses | 154 |  | 154 |
| Accrued real estate taxes | 4 | - | 4 |
|  | $9381 | $87018 | $96399 |

---

Costs and Expenses

Costs and expenses for the year ended December 31, 2022 increased by $51,000 when compared to the same period in 2021 as follows:

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| | | | |
|:---|:---|:---|:---|
|  | 2022 | 2021 | Increase<br>(Decrease) |
|  | ($ in thousands) | ($ in thousands) | ($ in thousands) |
| COSTS, EXPENSES AND OTHER |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of real estate sales | $17 | $15 | $2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | 1485 | 1437 | 48 |
| &nbsp;&nbsp;&nbsp;&nbsp;Taxes and assessments | 4 | 5 | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;Consulting and accounting-related party | 24 | 24 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Legal and professional | 3 | 1 | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 24 | 24 | - |
|  | $1557 | $1506 | $51 |

---

The cost of real estate sales for the year ended December 31, 2022 increased by $2,000 compared to the year ended December 31, 2021, due to an increase in sales of real estate in 2022.

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<u>Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)</u>

Interest expense accruing on the Company's outstanding debt held by non-related parties, increased by $48,000 during the year ended December 31, 2022 compared to the year ended December 31, 2021. Interest expense accruing on the Company's outstanding debt for subordinated convertible debentures, increased by $29,000 during the year ended December 31, 2022 as a result of interest accruing on past due balances. Interest expense relating notes payable increased by $19,000 due to an increase in the average prime interest rate of 4.84% for 2022 compared to 3.25% for 2021.

Taxes and assessments decreased by $1,000 in 2022 when compared to the same period in 2021 as a result of lower real estate tax expense due primarily to the sale of some parcels in 2022 and 2021.

Consulting and accounting expense was $24,000 for the years ended December 31, 2022 and 2021, respectively for accounting service fees paid to Love Real Estate Company ("LREC"). In addition, a quarterly consulting fee is paid to LREC of one-tenth of one percent of the carrying value of the Company's assets.

Legal and professional expenses increased by $2,000 during the year ended December 31, 2022 when compared to the same period in 2021 primarily due to the dissolution and wind up of the affairs of the Company.

General and administrative expenses were $24,000 during the years ended December 31, 2022 and 2021.

The Company realized net income of $95,081,000 for the year ended December 31, 2022, compared to a net loss of $1,412,000 for the year ended December 31, 2021. Included in the 2022 and 2021 income and loss per share computation is $640,000 ($.12 per share of Common Stock) of annual cumulative preferred stock dividends in arrears.

FINANCIAL CONDITION

Total assets decreased by $61,000 at December 31, 2022 compared to total assets at December 31, 2021 reflecting the following changes:

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| | | | |
|:---|:---|:---|:---|
|  | 2022 | 2021 | Increase<br>(Decrease) |
|  | ($ in thousands) | ($ in thousands) | ($ in thousands) |
| Cash  | $7 | $58 | $(51) |
| Land Inventory | - | 10 | (10) |
|  | $7 | $68 | $(61) |

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<u>Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)</u>

Net cash used in operating activities was $51,000 for the year ended December 31, 2022 compared to cash used in operations of $23,000 for the year ended December 31, 2021.

Cash received from operations during the year ended December 31, 2022 was $239,000 which was received from real estate sales. Cash received from operations in the year ended December 31, 2021 was $94,000, which represents $90,000 from real estate sales and $4,000 in miscellaneous income from a settlement claim from when the Company was operating as a home builder.

Cash expended for operations during the year ended December 31, 2022 was $290,000 which represents an increase of $173,000 compared to cash expended for operations of $117,000 in the year ended December 31, 2021.

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| | |
|:---|:---|
|  | Increase<br>(Decrease) |
|  | ($ in thousands) |
| Cost of real estate sales paid | $(3) |
| Interest - related party paid | 180 |
| General and administrative paid | (4) |
|  | $173 |

---

The increase of $180,000 in payments of accrued interest payable is a result of interest paid on collateralized debt of $230,000 in the year ended December 31, 2022 compared to $50,000 in 2021.

Liabilities were $7,000 at December 31, 2022 compared to $95,149,000 at December 31, 2021, reflecting the following changes:

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| | | | |
|:---|:---|:---|:---|
|  | 2022 | 2021 | Increase<br>(Decrease) |
|  | ($ in thousands) | ($ in thousands) | ($ in thousands) |
| Accounts payable and accrued expenses | $7 | $157 | $(150) |
| Accrued real estate taxes |  | 5 | (5) |
| Accrued interest |  | 33024 | (33024) |
| Accrued interest-related party |  | 52740 | (52740) |
| Notes payable |  | 1198 | (1198) |
| Convertible subordinated debentures payable | - | 8025 | (8025) |
|  | $7 | $95149 | $(95142) |

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<u>Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)</u>

Accounts payable and accrued expenses decreased by $150,000 at December 31, 2022, compared to December 31, 2021, with the treatment of $154,000 as debt forgiveness of accrued administration fees relating to the 6% subordinated convertible debentures which is offset by an increase of $4,000 for expenses accrued to wind up the affairs of the Company.

Accrued real estate taxes decreased by $5,000 at December 31, 2022 compared to December 31, 2021 due to the $1,000 payment of accrued real estate taxes in 2022 for parcels sold and the $4,000 reduction for delinquent real estate taxes on parcels that will be surrendered for tax sale.

Accrued interest decreased by $85,764,000 at December 31, 2022 compared to December 31, 2021 reflecting changes in the following accrued interest categories:

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| | | | |
|:---|:---|:---|:---|
|  | 2022 | 2021 | Increase<br>(Decrease) |
|  | ($ in thousands) | ($ in thousands) | ($ in thousands) |
| Convertible subordinated debentures | $- | $29512 | $(29512) |
| Convertible debentures-related party |  | 52740 | (52740) |
| Notes Payable | - | 3512 | (3512) |
|  | $- | $85764 | $(85764) |

---

Accrued interest decreased $29,512,000 with $30,915,000 relating to the convertible subordinated debentures treated as income from the forgiveness of accrued interest payable as compared to the $1,403,000 of interest expense accrued for the year ended December 31, 2022. See Note 8 to the consolidated financial statements under Item 8.

The decrease in accrued interest of $52,740,000 for the collateralized convertible debentures results from $230,000 in payment of interest and $52,510,000 in forgiveness of accrued interest during the year ended December 31, 2022. See Note 9 to the consolidated financial statements under Item 8.

The decrease of $3,512,000 of accrued interest relating to the Company's other outstanding debt represents $3,593,000 of income from the forgiveness of interest as compared to the $81,000 of interest expense accrued for the year ended December 31, 2022. See Note 7 of the consolidated financial statements under Item 8.

The Company's stockholders' deficiency of $95,081,000 at December 31, 2021 was eliminated as of December 31, 2022 with the recognition of the forgiveness of debt and interest in 2022 with the Company dissolution.

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<u>Off-Balance Sheet Arrangements</u>

The Company has no Off-Balance Sheet Arrangements.

<u>Item 7A. Qualitative and Quantitative Disclosures About Market Risk.</u>

Not Applicable

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<u>Item 8. Financial Statements and Supplementary Data</u>

Auditor Firm ID – 123

Auditor Name – None

Auditor Location – None

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| | | |
|:---|:---|:---|
| PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES |
| CONSOLIDATED STATEMEMENTS OF FINANCIAL POSITION (UNAUDITED) | CONSOLIDATED STATEMEMENTS OF FINANCIAL POSITION (UNAUDITED) | CONSOLIDATED STATEMEMENTS OF FINANCIAL POSITION (UNAUDITED) |
| December 31, 2022 and 2021 | December 31, 2022 and 2021 | December 31, 2022 and 2021 |
| ($ in thousands, except share data) | ($ in thousands, except share data) | ($ in thousands, except share data) |
|  | 2022 | 2021 |
| ASSETS |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash  | $7 | $58 |
| &nbsp;&nbsp;&nbsp;&nbsp;Land Inventory (Note 4) | - | 10 |
|  | $7 | $68 |
| LIABILITIES |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses (Note 5) | $7 | $157 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued real estate taxes (Note 5) |  | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued Interest: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subordinated convertible debentures (Note 7) |  | 29512 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Convertible debentures-related party (Note 8) |  | 52740 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes Payable (Note 6) |  | 3512 |
| &nbsp;&nbsp;&nbsp;&nbsp;Credit Agreements: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes Payable (Note 6) |  | 1198 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subordinated convertible debentures payable (Note 7) | - | 8025 |
|  | $7 | $95149 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commitments and Contingencies (Note 12) |  |  |
| STOCKHOLDERS' DEFICIENCY |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;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 $8,000,000 and cumulative dividends) (Note 10) | 2000 | 2000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock, par value $0.10 per share; authorized 25,000,000 shares; 5,317,758 shares issued and outstanding (Note 10) | 532 | 532 |
| &nbsp;&nbsp;&nbsp;&nbsp;Paid-in capital | 13498 | 13498 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | (16030) | (111111) |
|  | - | (95081) |
|  | $7 | $68 |

---

See accompanying notes to consolidated financial statements.

---

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---

| | | |
|:---|:---|:---|
| PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
| Years ended December 31, 2022 and 2021 | Years ended December 31, 2022 and 2021 | Years ended December 31, 2022 and 2021 |
| ($ in thousands, except per share data) | ($ in thousands, except per share data) | ($ in thousands, except per share data) |
|  | 2022 | 2021 |
| Revenues: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real Estate Sales | $239 | $90 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Forgiveness of Debt and interest | 96399 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Miscellaneous income | - | 4 |
|  | 96638 | 94 |
| Costs and expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of real estate sales | 17 | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest | 1485 | 1437 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes and assessments | 4 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consulting and accounting-related party | 24 | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Legal and professional | 3 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 24 | 24 |
|  | 1557 | 1506 |
| Net Income (Loss) | $95081 | $(1412) |
| Net Income (Loss) Per Share  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Available to Common Stockholders |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic and Diluted (Note 15) | $17.76 | $(0.39) |

---

See accompanying notes to consolidated financial statements.

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| | | |
|:---|:---|:---|
| PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
| Years ended December 31, 2022 and 2021 | Years ended December 31, 2022 and 2021 | Years ended December 31, 2022 and 2021 |
| ($ in thousands) | ($ in thousands) | ($ in thousands) |
|  | 2022 | 2021 |
| Cash flows from operating activites: |  |  |
| Cash received from operations: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Real estate sales | $239 | $90 |
| &nbsp;&nbsp;&nbsp;&nbsp;Miscellaneous income | - | 4 |
|  | 239 | 94 |
| Cash expended for operations: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of real estate sales | 7 | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest - related party | 230 | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;Taxes and assessments | 5 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Consulting and accounting-related party | 24 | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;Legal and professional | 1 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 23 | 27 |
|  | 290 | 117 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash flows used in operating activities | (51) | (23) |
| Net change in cash | (51) | (23) |
| Cash at beginning of year | 58 | 81 |
| Cash at end of year | $7 | $58 |

---

See accompanying notes to consolidated financial statements.

---

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| | | |
|:---|:---|:---|
| PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued) | CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued) | CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued) |
| Years ended December 31, 2022 and 2021 | Years ended December 31, 2022 and 2021 | Years ended December 31, 2022 and 2021 |
| ($ in thousands) | ($ in thousands) | ($ in thousands) |
|  | 2022 | 2021 |
| Reconciliation of net loss to net cash used in operating activities: |  |  |
| Net income (loss) | $95081 | $(1412) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Forgiveness of debt and interest | (96399) |  |
| Decrease in assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Land inventory | 10 | 4 |
| Increase (decrease) in liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 3 | (3) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued real estate taxes | (1) | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest | 1255 | 1387 |
| Net cash flows used in operating activities | $(51) | $(23) |

---

See accompanying notes to consolidated financial statements.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES | PGI INCORPORATED AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (UNAUDITED) | CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (UNAUDITED) | CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (UNAUDITED) | CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (UNAUDITED) | CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (UNAUDITED) | CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (UNAUDITED) | CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (UNAUDITED) | CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (UNAUDITED) |
| Year ended December 31, 2022 | Year ended December 31, 2022 | Year ended December 31, 2022 | Year ended December 31, 2022 | Year ended December 31, 2022 | Year ended December 31, 2022 | Year ended December 31, 2022 | Year ended December 31, 2022 |
| ($ in thousands, except share data) | ($ in thousands, except share data) | ($ in thousands, except share data) | ($ in thousands, except share data) | ($ in thousands, except share data) | ($ in thousands, except share data) | ($ in thousands, except share data) | ($ in thousands, except share data) |
|  | Preferred Stock | Preferred Stock | Common Stock | Common Stock | Paid-in | Accumulated |  |
|  | Shares | Par Value | Shares | Par Value | Capital | Deficit | Total |
| Balances at 1/1/22 | 2000000 | $2000 | 5317758 | $532 | $13498 | $(111111) | $(95081) |
| Net Income (Loss) | - | - | - | - | - | 95081 | 95081 |
| Balances at 12/31/22 | 2000000 | $2000 | 5317758 | $532 | $13498 | $(16030) | $- |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| Year ended December 31, 2021 | Year ended December 31, 2021 | Year ended December 31, 2021 | Year ended December 31, 2021 | Year ended December 31, 2021 | Year ended December 31, 2021 | Year ended December 31, 2021 | Year ended December 31, 2021 |
| ($ in thousands, except share data) | ($ in thousands, except share data) | ($ in thousands, except share data) | ($ in thousands, except share data) | ($ in thousands, except share data) | ($ in thousands, except share data) | ($ in thousands, except share data) | ($ in thousands, except share data) |
|  | Preferred Stock | Preferred Stock | Common Stock | Common Stock | Paid-in | Accumulated |  |
|  | Shares | Par Value | Shares | Par Value | Capital | Deficit | Total |
| Balances at 1/1/21 | 2000000 | $2000 | 5317758 | $532 | $13498 | $(109699) | $(93669) |
| Net Loss | - | - | - | - | - | (1412) | (1412) |
| Balances at 12/31/21 | 2000000 | $2000 | 5317758 | $532 | $13498 | $(111111) | $(95081) |

---

See accompanying notes to consolidated financial statements.

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

1. <u>Nature of Business and Dissolution:</u>

PGI Incorporated and Subsidiaries (the Company), a Florida corporation, was founded in 1958, and up until the mid 1990's was in business of building and selling homes, developing and selling home sites and selling undeveloped or partially developed tracts of land. Over approximately the last 30 years, the Company's business focus and emphasis changed substantially as it has concentrated its sales exclusively on the disposition of its remaining real estate.

In early 2019, the Board of Directors of PGI concluded that PGI met and has continued to meet all of the conditions under which a registrant may be deemed an "Inactive Entity" as that term is defined or contemplated in Rule 3-11 of Regulation S-X and as the term "Inactive Registrant" is further contemplated in the Securities and Exchange Commission's Division of Corporation Finance's Financial Reporting Manual section 1320.2. Under Rule 3-11 of Regulation S-X, the financial statements required thereunder with respect to an Inactive Registrant for purposes of reports pursuant to the Securities Exchange Act of 1934, including but not limited to annual reports on Form 10-K, may be unaudited. A representative of PGI informally discussed its view that PGI is an Inactive Registrant with a staff member of the Chief Accountant's Office in the Division of Corporation Finance in February 2019.

Effective December 21, 2022, the Officers and Directors of PGI executed a Resolution to cease operations and allow the dissolution and wind up of the affairs of the Company.

The Resolution approved the sale of the Company's last remaining parcel of value to Love Investment Company ("LIC"), a Missouri Corporation, as well as the Company's primary preferred shareholder. The respective parcel was sold to LIC through its wholly owned subsidiary, Sugarmill Woods, Inc. ("Sugarmill Woods") for a purchase price of $200,000, consistent with the offer in the most recent failed sale transaction. Also in 2022, two single family lots were sold and Sugarmill Woods realized approximately $39,000.

The Resolution further approves the proceeds of the sale of the Citrus County Parcel to be paid in full settlement of the remaining aggregate balance of accrued interest of the Convertible Secured Debentures held by Love-1989, a Missouri limited partnership, an affiliate of the Company and to LIC in proportion to their respective outstanding balances which totals $52,709,836.

The Company's remaining land inventory consists of minor parcels of easements in Citrus County, Florida, which are owned through its wholly owned subsidiary, Sugarmill Woods. In addition, Punta Gorda Isles Sales, Inc. ("PGIS"), a wholly owned subsidiary of the Company, owns 12 parcels of real estate in Charlotte County, Florida, which total approximately 58 acres. These parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale. The real estate taxes for the remaining parcels are delinquent and the parcels are available for tax sale.

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

1. <u>Nature of Business and Dissolution (continued):</u>

The Company has been administratively dissolved by the Florida Secretary of State for the 2022 calendar year.

2. <u>Significant Accounting Policies:</u>

<u>Principles of Consolidation</u>

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries after eliminating all significant inter-company transactions.

<u>Accounting Estimates</u>

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

3. <u>Real Estate Sales, Forgiveness of Debt and Interest and Other Income:</u>

Revenues included forgiveness of indebtedness income and totaled $96,638,000 for the year ended December 31, 2022 compared to revenues of $94,000 for the year ended December 31, 2021.

Real estate sales and cost of sales consisted of:

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
|  | ($ in thousands) | ($ in thousands) |
| Real estate sales | $239 | $90 |
| Cost of sales | 17 | 15 |
| Gross profit margin | $222 | $75 |

---

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

3. <u>Real Estate Sales, Forgiveness of Debt and Interest and Other Income (continued):</u>

The Company recognized forgiveness of debt and interest expense for the year ended December 31, 2022 as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Forgiveness<br>of Debt | Forgiveness<br>of Interest | <br>Total |
|  | ($ in thousands) | ($ in thousands) | ($ in thousands) |
| Notes Payable (Note 6) | $1198 | $3593 | $4791 |
| Subordinated convertible debentures (Note 7) | 8025 | 30915 | 38940 |
| Convertible debentures related party (Note 8) |  | 52510 | 52510 |
| Accrued expenses | 154 |  | 154 |
| Accrued real estate taxes | 4 | - | 4 |
|  | $9381 | $87018 | $96399 |

---

Other income totaled $4,000 for the year ended December 31, 2021 which represents income from a settlement claim from over 30 years ago when the Company was operating as a home builder. There was no other income for the year ended December 31, 2022.

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

4. <u>Land Inventory:</u>

Land inventory consisted of:

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
|  | ($ in thousands) | ($ in thousands) |
| Fully improved land | $- | $10 |
|  | $- | $10 |

---

5. <u>Accounts Payable and Accrued Expenses:</u>

Accounts payable and accrued expenses consisted of:

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
|  | ($ in thousands) | ($ in thousands) |
| Accounts payable | $7 | $- |
| Accrued audit, review and tax expense |  | 3 |
| Accrued debenture fees |  | 153 |
| Accrued miscellaneous | - | 1 |
|  | $7 | $157 |

---

<u>Accrued Real Estate Taxes:</u>

Accrued real estate taxes consisted of:

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
|  | ($ in thousands) | ($ in thousands) |
| Current | $- | $4 |
| Delinquent | - | 1 |
|  | $- | $5 |

---

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

6. <u>Notes Payable:</u>

The Company recognized forgiveness of debt and interest for the remaining outstanding notes payable balances with the December 21, 2022 Resolution to cease operations and allow the dissolution and wind up the affairs of the Company.

The notes payable forgiveness of debt and interest for the year ended December 31, 2022 is as follows:

---

| | | |
|:---|:---|:---|
|  | Debt | Interest |
|  | ($ in thousands) | ($ in thousands) |
| Notes Payable- |  |  |
| At prime plus 2%, due October 1, 1985 | $176 | $508 |
| At prime plus 2%, due October 1, 1987 | 1000 | 3085 |
| Non-interest bearing, due August 1, 1993 | 22 | - |
|  | $1198 | $3593 |

---

Accrued interest on notes payable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
|  | ($ in thousands) | ($ in thousands) |
| Notes Payable- |  |  |
| At prime plus 2%, due October 1, 1985 | $- | $496 |
| At prime plus 2%, due October 1, 1987 | - | 3016 |
|  | $- | $3512 |

---

7. <u>Subordinated Convertible Debentures Payable:</u>

The Company recognized forgiveness of debt and interest for the remaining outstanding balance of the Subordinated Convertible Debentures with the December 21, 2022 Resolution to cease operations and allow the dissolution and wind up of the affairs of the Company.

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

7. <u>Subordinated Convertible Debentures Payable (continued):</u>

The Subordinated Convertibles Debentures forgiveness of debt and interest for the year ended December 31, 2022 consisted of:

---

| | | |
|:---|:---|:---|
|  | Debt | Interest |
|  | ($ in thousands) | ($ in thousands) |
| 6%, due May, 1992 | $8025 | $30915 |

---

The Company was party to an agreement with Deutsch Bank Trust Company Americas (formerly known as Bankers Trust Company) as trustee pursuant to that certain Indenture dated May 1, 1972 ("the Indenture"), as to which Indenture the Company executed a certain Tolling Agreement dated April 15, 1998 for the purpose of tolling the application of the statute of limitations to said Indenture and the Company thereafter executed twenty-four (24) separate annual amendments to said tolling agreement such that the current Termination Date thereof is May 1, 2023. The Company will not execute any further tolling agreements with regard to the Indenture.

Since issuance, $152,000 of the 6% debentures have been converted into common stock. This conversion feature is no longer in effect.

Accrued interest on the 6% subordinated convertible debentures was $29,512,000 as of December 31, 2021.

The debentures are not collateralized and are subordinate to senior indebtedness ($1,198,000 at December 31, 2021). Payment of dividends on the Company's common stock is restricted under the terms of the two indentures pursuant to which the outstanding debentures are issued.

8. <u>Convertible Debentures Payable:</u>

In May 2008, LIC purchased $703,000 in principal amount of the Company's convertible debentures from the previous debenture holder. The balance of the outstanding convertible debentures in the amount of $797,000, were held by Love-1989. The debentures held by Love-1989 and LIC were secured by a second mortgage behind PGIP on the 366 acres retained by the Company and a security interest behind that held by PGIP in the restricted proceeds escrow. The total debentures balance of $1,500,000 carried a maturity date of July 8, 1997 and were in default as of December 31, 2015. In 2016 the 366 acres were sold and the primary lender obligation to PGIP was respectively paid, in addition to the convertible debentures principal of $1,500,000 and a portion of the accrued interest. Interest on the debentures accrued at the rate of fourteen percent compounded quarterly until the principal was paid in 2016.

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

8. <u>Convertible Debentures Payable (continued):</u>

During the years ended December 31, 2022 and 2021 the Company paid $230,000 and $50,000, respectively of accrued interest for the related party collateralized convertible debentures.

In 2022, the Company recognized income for the forgiveness of the balance of accrued interest of $52,510,000 with the December 21, 2022 Resolution to cease operations and allow the dissolution and wind up of the affairs of the Company. The Resolution approved the final payment of accrued interest of $200,000 as settlement in full for the remaining balance of the accrued interest.

The Interest paid and forgiveness of interest for the Convertible Debentures for the year ended December 31, 2022 is as follows:

---

| | | |
|:---|:---|:---|
|  | Interest<br>Paid | Interest<br>Forgiven |
|  | ($ in thousands) | ($ in thousands) |
| Love-1989 Convertible Debenture | $122 | $28133 |
| LIC Convertible Debenture | 108 | 24377 |
|  | $230 | $52510 |

---

The accrued interest was $52,740,000 as of December 31, 2021.

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

9. <u>Income Taxes:</u> 

The Company will file a final tax return for the year ended December 31, 2022 due to the December 21, 2022 Resolution. There is no income tax liability.

The net operating loss carryforwards of $69,349,000 are utilized in 2022 and the excess of income from forgiveness of debt and interest is not included in gross income due to the insolvency of the Company pursuant to Internal Revenue Code Section 108(a)(1).

Reconciliation of the statutory federal income tax rates, 21% for the years ended December 31, 2022 and 2021, to the Company's effective income tax rates follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | 2022 | 2022 | 2021 | 2021 |
|  | ($ in thousands) | ($ in thousands) | ($ in thousands) | ($ in thousands) |
|  |  | Percent of |  | Percent of |
|  | Amount of tax | Pre-tax Loss | Amount of tax | Pre-tax Loss |
| Expected tax credit | $- | -21.0% | $(297) | -21.0% |
| State income taxes, net of federal tax benefits |  | -4.0% | (56) | -4.0% |
| Decrease in environmental liability |  | 0.0% |  | 0.0% |
| Increase (decrease) in valuation allowance | - | 25.0% | 353 | 25.0% |
|  | $- | 0.0% | $- | 0.0% |

---

The Company's net operating loss carryforwards were utilized in 2022.

---

| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
|  | ($ in thousands) | ($ in thousands) |
| Deferred tax asset: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net operating loss carryover | $- | $18154 |
| &nbsp;&nbsp;&nbsp;&nbsp;Expenses capitalized under IRC 263(a) |  | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax credits (AMT) |  | 57 |
| &nbsp;&nbsp;&nbsp;&nbsp;Valuation allowance | - | (18248) |
| Net deferred tax asset | $- | $- |

---

The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2019. It is the Company's policy to classify interest and penalties related to its tax positions in general and administrative expense in the consolidated statements of operations.

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

10. <u>Capital Stock:</u>

Effective December 31, 2016, L-PGI liquidated and assigned the 2,260,706 shares of common stock of the Company and 1,875,000 shares of preferred stock of the Company, that were held by L-PGI to LIC, in conjunction with settling its remaining indebtedness. LIC was the general partner of L-PGI and is owned, directly or indirectly, by Andrew S. Love and Laurence A. Schiffer, which are the directors and executive officers of the Company.

In March 1987, the Company sold, in a private placement, 1,875,000 shares of its Class A cumulative convertible preferred stock to L-PGI for a purchase price of $7,500,000 cash ($4.00 per share). The Company also converted $500,000 of indebtedness owed to a corporation owned by the Company's former Chairman of the Board of Directors and members of his family into 125,000 shares of the cumulative convertible preferred stock.

The holders of the preferred stock are entitled to one vote per share and, except as provided by law, will vote as one class with the holders of the common stock. Class A preferred stockholders are also entitled to receive cumulative dividends at the annual rate of $.32 per share, an effective yield of 8%. Dividends accrued for an initial two year period and, at the expiration of this period, preferred stockholders had the option of receiving accumulated dividends, when and if declared by the Board of Directors, in cash (unless prohibited by law or contract) or common stock. At December 31, 2022 cumulative preferred dividends in arrears totaled $17,715,000 ($640,000 of which related to the year ended December 31, 2022). On May 15, 1997 preferred dividends accrued through April 25, 1995 totaling $4,260,000 were paid in the form of 2,000,203 shares of common stock.

As of December 31, 2022 and 2021, the preferred stock is callable or redeemable at the option of the Company at $4.00 per share plus accrued and unpaid dividends. In addition, the preferred stock will be entitled to preference of $4.00 per share plus accrued and unpaid dividends in the event of liquidation of the Company.

At December 31, 2022 and 2021, the Company had reserved 3,756,000 common shares for the conversion of preferred stock.

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

11. Quarterly Results:

Effective December 21, 2022, the Officers and Directors of PGI executed a Resolution to cease operations and allow the dissolution and wind up of the affairs of the Company.

As a result, the Company sold the last remaining parcel of value, a seven-acre parcel in Citrus County, Florida, to LIC, the Company's primary preferred shareholder, that provided sale proceeds of approximately $200,000 in the fourth quarter of 2022. The Company paid the respective proceeds of $200,000 in full settlement of the remaining aggregate balance of accrued interest of the Convertible Secured Debentures held by Love-1989, an affiliate of the Company and to LIC in proportion to their respective outstanding balances which totals $52,709,836.

The company recognized forgiveness of debt and interest expense of $96,399,000 in the quarter ended December 31, 2022.

12. <u>Commitments and Contingencies:</u>

The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.

13. <u>Related Party Transactions:</u>

The Company's primary preferred shareholder is LIC which is owned and managed by Andrew S. Love and Laurence A. Schiffer. Messrs. Love and Schiffer serve as the executive officers and directors of the Company.

In May 2008, LIC purchased $703,000 in principal amount of the Company's convertible debentures from the previous debenture holder. The balance of the outstanding convertible debentures in the amount of $797,000, were held by Love-1989. The debentures held by Love-1989 and LIC were secured by a second mortgage behind PGIP on the 366 acres retained by the Company and a security interest behind that held by PGIP in the restricted proceeds escrow. The total debentures balance of $1,500,000 carried a maturity date of July 8, 1997 and were in default as of December 31, 2015. In 2016 the 366 acres were sold and the primary lender obligation to PGIP was respectively paid, in addition to the convertible debentures principal of $1,500,000 and a portion of the accrued interest. Interest on the debentures accrued at the rate of fourteen percent compounded quarterly until the principal was paid in 2016.

Effective December 21, 2022, the Officers and Directors of PGI executed a Resolution to cease operations and allow the dissolution and wind up of the affairs of the Company.

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

13. <u>Related Party Transactions (continued):</u>

As a result, the Company sold the last remaining parcel of value, a seven-acre parcel in Citrus County, Florida, to LIC, the Company's primary preferred shareholder. The parcel was sold for $200,000, consistent with the offer in the most recent failed sale transaction earlier in the year. The Company paid the proceeds of $200,000 in full settlement of the remaining $52,709,836 balance of accrued interest of the Convertible Secured Debentures held by Love-1989, an affiliate of the Company and to LIC.

During the years ended December 31, 2022 and 2021 the Company paid $230,000 and $50,000, respectively, of accrued interest for the related party collateralized convertible debentures.

The accrued interest was $52,740,000 as of December 31, 2021.

PGIP is owned and managed by Hallmark Investment Corporation ("HIC"). Messrs. Love and Schiffer are directors and executive officers of HIC and own 90% of all the issued and outstanding voting stock of HIC.

The Company has maintained its administration and accounting offices with LREC, which is owned by LIC and has been paid a monthly fee for the following:

1. Maintain books of original entry;

2. Prepare quarterly and annual SEC filings;

3. Coordinate the quarterly reviews;

4. Assemble information for tax filing, review reports as prepared by tax accountants and file same;

5. Track shareholder records through transfer agent;

6. Maintain policies of insurance against property and liability exposure;

7. Handle day-to-day accounting requirements

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

13. <u>Related Party Transactions (continued):</u>

In addition, the Company has received office space, telephone service and computer service from LREC. A fee of $2,000 per month was accrued in 2022 and 2021. The Company made payments of $24,000 to LREC in 2022 and 2021, respectively, for service fees. There were no accrued accounting service fees as of December 31, 2022 and 2021.

The Company has had a Management Consulting Agreement with LREC. As a consultant to the Company and in addition to the above services, LREC has provided other services including, but not limited to, strategic planning, marketing and financing as requested by the Company. In consideration for these consulting services, the Company has paid LREC a quarterly consulting fee of one-tenth of one percent of the carrying value of the Company's assets, plus reasonable out-of-pocket expenses. As of December 31, 2022 and 2021, the carrying value of the Company's assets was approximately $7,000 and $68,000 respectively. Consulting fees were $170 and $300 in 2022 and 2021, respectively.

In 1985 a corporation owned by the former Chairman of the Board and his family made an uncollateralized loan to the Company. The Company recognized forgiveness of debt and interest as of December 31, 2022, for the outstanding principal balance of $176,000 and outstanding accrued interest of $508,000, totaling $684,000. The balance of outstanding principal at December 31, 2021 was $176,000 plus accrued interest of $496,000, totaling an outstanding balance of $672,000. Interest accrued on this loan was $12,000 and $9,000 in 2022 and 2021, respectively.

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

14. <u>Fair Value of Financial Instruments:</u>

The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value:

Cash:

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

Receivables:

The carrying amount approximates fair value because of the short-term maturity of those receivables.

Accounts Payable:

The carrying amount approximates fair value because of the short-term maturity of those debts.

Debt:

It was not practicable to estimate the fair value of the Company's notes payable and its subordinated convertible debentures because these debts are in default causing no basis for estimating value by reference to quoted market prices or current rates offered to the Company for debt of the same remaining maturities.

The estimated fair values of the Company's financial instruments are as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | 2022 | 2022 | 2021 | 2021 |
|  | ($ in thousands) | ($ in thousands) | ($ in thousands) | ($ in thousands) |
|  | Carrying | Fair | Carrying | Fair |
|  | Amount | Value | Amount | Value |
| Cash  | $7 | $7 | $58 | $58 |
| Accounts payable | 7 | 7 |  |  |
| Debt |  |  | 9223 |  |

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PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

15. <u>Income (Loss) Per Share:</u>

The following is a summary of the calculations used in computing basic and diluted income (loss) per share:

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| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
|  | ($ in thousands, except share data) | ($ in thousands, except share data) |
| Numerator: |  |  |
| Net Income (Loss) | $95081 | $(1412) |
| Preferred Dividends | (640) | (640) |
| Loss Available to Common Shareholders | $94441 | $(2052) |
| Denominator: |  |  |
| Basic and Diluted |  |  |
| Weighted average amount of shares outstanding | 5317758 | 5317758 |
| Income (Loss) per share |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | $17.76 | $(0.39) |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | $17.76 | $(0.39) |

---

16. <u>Subsequent Events:</u>

Management has evaluated subsequent events from the balance sheet date through March 31, 2023 and has determined that no material subsequent events exist.

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<u>Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</u>

The Company's independent registered public accounting firm, BKD, declined to stand for re-engagement subsequent to the audit for fiscal year ended December 31, 2018 ("Fiscal 2018"). The Form 10-K for Fiscal 2018 was filed on February 25, 2019. There were no disagreements with BKD on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

In April 2019, the Company engaged the accounting firm of Milhouse & Neal, LLP as independent accountants for the fiscal year ended December 31, 2019. Due to the inactive status of the Company and its diminishing financial resources, the Company elected not to engage the accounting firm of Milhouse & Neal, LLP to perform a review for the fiscal year ended December 31, 2022 and 2021.

<u>Item 9A. Controls and Procedures</u>

The Company has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended) under the supervision and with the participation of the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO") of the Company. Based on this evaluation, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of December 31, 2022. There have been no changes in the Company's internal control over financial reporting during the Company's fourth fiscal quarter ending December 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

<u>Management's Report on Internal Control over Financial Reporting</u>

Management of PGI Incorporated (the "Company") is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles. The Company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

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<u>Item 9A. Controls and Procedures (continued)</u>

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even an effective system of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.

Management has assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2022, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on that assessment, management concludes that, as of December 31, 2022, the Company's internal control over financial reporting is effective.

<u>Item 9B. Other Information</u>

Not Applicable

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<u>PART III</u>

<u>Item 10. Directors, Executive Officers, and Corporate Governance.</u>

The following information, regarding executive officers and directors of the Company, is as of March 31, 2023.

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| | |
|:---|:---|
| Name and Age | Position with Company and Business Experience During the Last Five Years  |
| &nbsp;&nbsp;&nbsp;&nbsp;Laurence A. Schiffer<br>(age 83) | Director of the Company since April 1987; President, Chief Executive Officer and Chief Financial Officer of the Company since February 1994; Vice Chairman of the Board since May 1987; President and Chief Executive Officer of Love Real Estate Company and Love Investment Company since 1973; Manager of PGIP since 1995; member of the Real Estate Board of Metropolitan St. Louis and the National Association of Real Estate Boards.  |
| &nbsp;&nbsp;&nbsp;&nbsp;Andrew S. Love<br>(age 79) | Director and Chairman of the Company's Board of Directors since May 1987; Secretary of the Company since February 1994; Chairman of the Board of Love Real Estate Company and Secretary of Love Investment Company since 1973; Partner in St. Louis based law firm of Bryan, Cave, McPheeters & McRoberts until 1991; Manager of PGIP since 1995. |

---

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

The directors of the Company have determined that the Company does not have an audit committee financial expert serving on its board of directors (which acts as the Company's audit committee). In addition, the Company has not adopted a code of ethics that applies to its principal executive officer and principal financial officer (principal accounting officer). The Company's decision not to adopt a code of ethics or to have an audit committee financial expert are primarily attributable to the following reasons: (i) as a result of its continuing financial difficulties due to amounts owed on its debt, the Company is focused almost exclusively on the disposition of its remaining real estate; (ii) as described in Item 5, there have been no reported transactions in the Company's Common Stock since January 29, 1991, other than the odd lot tender offer in 2003, the assignment of the 2,260,706 shares of Company Common Stock by L-PGI to LIC in 2016, and the 2017 quotations; (iii) the board of directors of the Company consists of only two directors and these two directors are also the only executive officers of the Company; and (iv) the same person serves as the Company's chief executive officer and chief financial officer.

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<u>Item 11. Executive Compensation</u>

The Company's Chief Executive Officer and Chief Financial Officer is Mr. Laurence A. Schiffer. Because of the Company's impaired financial condition, it does not compensate in any manner Mr. Schiffer or Mr. Love, the Company's only other executive officer, for the services they perform for the Company in that capacity or in their capacity as directors of the Company. Management services are provided to the Company by Love Real Estate Company ("LREC"), which is an affiliate of Love Investment Company, pursuant to that certain Management Consulting Agreement by and between the Company and LREC dated March 25, 1987 (the "Management Agreement"). Mr. Schiffer and Mr. Love are employees of, and receive an annual salary from LREC. Neither the Company nor LREC maintains records, which would allow either of them to attribute any portion of the remuneration Mr. Schiffer receives from LREC to the management services he performs for the Company. See Item 13. "Certain Relationships and Related Party Transactions, and Director Independence" for additional information about the Management Agreement.

Neither Mr. Schiffer nor Mr. Love had any outstanding equity awards. The Company does not have a compensation plan or individual compensation arrangement under which its equity securities may be issued.

Neither Mr. Schiffer nor Mr. Love received fees from any source directly attributable to their services as directors of the Company during 2022.

<u>Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</u>

The table below provides certain information as of March 31, 2023 regarding the beneficial ownership of the Common Stock and the Class A cumulative convertible preferred stock (the "Preferred Stock") by each person known by the Company to be the beneficial owner of more than five percent of either the Common Stock or the Preferred Stock, each director of the Company (which persons are also the Company's only executive officers), and by virtue of the foregoing, the directors and executive officers of the Company as a group.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | |  | |  | Percent of Total | Percent of Total | Percent of Total | Percent of |
| Name(8) | Common<br>Stock |  | Preferred<br>Stock |  | Common<br>Stock (1) |  | Preferred<br>Stock | Total Voting<br>Power (1) |
| Estate of Harold Vernon  | 998777 | (1)(2) |  |  | 18.8 | % |  | 13.7% |
| Mary Anne Johns Trust  | - | (2)(3) | 125000 | (3) | - | (3) | 6.3% | 5.0% |
| Love Investment Company  | 2260706 | (4) | 1875000 | (4) | 42.5 | % | 93.8% | 56.5% |
| Andrew S. Love  | 2263215 | (5) | 1875000 | (5) | 42.6 | % | 93.8% | 56.6% |
| Laurence A. Schiffer  | 2263215 | (6) | 1875000 | (6) | 42.6 | % | 93.8% | 56.6% |
| All executive officers and directors as a group (2 persons)  | 2263215 | (7) | 1875000 | (7) | 42.6 | % | 93.8% | 56.6% |

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1. The shares of Common Stock owned by the Estate of Mr. Vernon are currently in the possession of the Federal Deposit Insurance Corporation ("FDIC") which is the receiver for First American Bank and Trust, Lake Worth, Florida ("First American"). First American previously made a loan to Mr. Vernon, which was secured by these shares. The loan is in default and the Company understands that the FDIC has the right, pursuant to a pledge agreement, to vote the shares at any annual or special meeting of shareholders.

2. Information obtained from filings made with the Securities and Exchange Commission.

3. Includes the beneficial ownership of shares of Common Stock which represent less than 5% of the outstanding shares of Common Stock; sole voting and investment power over 125,000 shares of Preferred Stock, which shares are held in the name of Mary Anne Johns, as Trustee of the Mary Anne Johns Declaration of Trust.

4. Love Investment Company ("LIC") is a Missouri Corporation owned by Mr. Love, a Love trust and Mr. Schiffer. Messrs. Love and Schiffer serve as the executive officers and directors of LIC.

5. These shares are the same shares owned by LIC together with the 2,509 shares of Common Stock owned by PGIP, LLC. Mr. Love is an indirect and direct owner of LIC and an indirect owner of PGIP, LLC. See Footnote 4 above and Item 13. "Certain Relationships and Related Party Transactions, and Director Independence" for more information. Accordingly, Mr. Love has shared voting and investment power over all of these shares.

6. These shares are the same shares owned by LIC, together with the 2,509 shares of Common Stock owned by PGIP, LLC. Mr. Schiffer is an indirect and direct owner of LIC and an indirect owner of PGIP, LLC. See Footnote 4 above and Item 13. "Certain Relationships and Related Transactions, and Director Independence" for more information. Accordingly, Mr. Schiffer has shared voting and investment power over all of these shares.

7. These shares are the same shares reflected in Footnotes 4, 5 and 6. See Footnote 4 above and Item 13. "Certain Relationships and Related Transactions, and Director Independence" for more information.

8. Addresses for beneficial owners are as follows:

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| | | |
|:---|:---|:---|
| Estate of Harold Vernon  | Love Investment Company  | Laurence A. Schiffer |
| 3201 W. Rolling Hills Circle  | 212 So. Central, Suite 304  | 212 So. Central, Suite 201 |
| Davie, FL 33328  | St. Louis, MO 63105  | St. Louis, MO 63105 |
| Mary Anne Johns Trust  | Andrew S. Love |  |
| One Woodland Drive  | 212 So. Central, Suite 201 |  |
| Punta Gorda, FL 33982  | St. Louis, MO 63105 |  |

---

As of December 31, 2022, the Company did not have a compensation plan or individual compensation arrangement under which its equity securities may be issued.

<u>Item 13. Certain Relationships and Related Transactions, and Director Independence</u>

The Company's primary preferred shareholder is LIC which is primarily owned and managed by Andrew S. Love and Laurence A. Schiffer. Messrs. Love and Schiffer serve as the executive officers and directors of the Company. See also Note 13 to the Notes to Consolidated Financial Statements.

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In May 2008, LIC purchased $703,000 in principal amount of the Company's convertible debentures from the previous debenture holder. The balance of the outstanding convertible debentures in the amount of $797,000, were held by Love-1989. The debentures held by Love-1989 and LIC were secured by a second mortgage behind PGIP on the 366 acres retained by the Company and a security interest behind that held by PGIP in the restricted proceeds escrow. The total debentures balance of $1,500,000 carried a maturity date of July 8, 1997 and were in default as of December 31, 2015. In 2016 the 366 acres were sold and the primary lender obligation to PGIP was respectively paid, in addition to the convertible debentures principal of $1,500,000 and a portion of the accrued interest. Interest on the debentures accrued at the rate of fourteen percent compounded quarterly until the principal was paid in 2016.

Effective December 21, 2022, the Officers and Directors of PGI executed a Resolution to cease operations and allow the dissolution and wind up of the affairs of the Company.

As a result, the Company sold the last remaining parcel of value, a seven-acre parcel in Citrus County, Florida, to LIC, the Company's primary preferred shareholder, that provided sale proceeds of approximately $200,000. The Company paid the respective proceeds of $200,000 in full settlement of the remaining aggregate balance of accrued interest of the Convertible Secured Debentures held by Love-1989, an affiliate of the Company and to LIC in proportion to their respective outstanding balances which totals $52,709,836.

During the years ended December 31, 2022 and 2021 the Company paid $230,000 and $50,000, respectively, of accrued interest for the related party collateralized convertible debentures.

During the year ended December 31, 2022 and 2021 the Company paid $230,000 and $50,000 of accrued interest for the related party collateralized convertible debentures.

The accrued interest was $52,740,000 as of December 31, 2021.

PGIP is owned and managed by Hallmark Investment Corporation. Messrs. Love and Schiffer are directors and executive officers of HIC and own 90% of all the issued and outstanding voting stock of HIC.

The Company has maintained its administration and accounting offices with the offices of LREC in St. Louis, Missouri. LREC, a Missouri Corporation, is owned by LIC, and is located at 212 South Central Avenue, St. Louis, Missouri 63105. A fee of $2,000 per month was accrued in 2022 and 2021. The Company made payments of $24,000 to LREC in 2022 and 2021, respectively, for the services described in the next paragraph. There were no accrued accounting service fees as of December 31, 2022 and 2021.

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The following is a list of services provided by LREC during 2022:

1. Maintain books of original entry;

2. Prepare quarterly and annual SEC filings;

3. Coordinate the quarterly reviews;

4. Assemble information for tax filing, review reports as prepared by tax accountants and file same;

5. Track shareholder records through transfer agent;

6. Maintain policies of insurance against property and liability exposure;

7. Handle day-to-day accounting requirements; and

8. Provide telephone and computer service.

Although an amount was paid to LREC as reimbursement for expenses and as a fee for providing management services to the Company, neither the Company nor LREC maintain records which would allow them to attribute any portion of the aforementioned monthly fee to reimbursement of particular expenses or to payment for the management services performed for the Company by individual employees of LREC, including Messrs. Love and Schiffer.

The Company had a Management Agreement with LREC. As a consultant to the Company and in addition to the services listed on the previous page, LREC provided other services including, but not limited to, strategic planning, marketing, and financing as requested by the Company. In consideration for these consulting services, the Company paid LREC a quarterly consulting fee of one-tenth of one percent of the book value of the Company's assets, plus reasonable out-of-pocket expenses. As of December 31, 2022 and 2021, the book value of the Company's assets was $7,000 and $68,000. Consulting fees were $170 and $300 in 2022 and 2021, respectively. The Management Agreement has been discontinued with the dissolution of the Company effective December 21, 2022.

Mr. Schiffer and Mr. Love receive a salary from LREC, such salary compensates them for their services to LREC, which provides consulting services for numerous other entities affiliated with the Company, and none of the amount earned by LREC under the Management Agreement is intended to be allocated or attributable to any officer or employee, including Mr. Schiffer, of LREC. No part of Mr. Schiffer's annual salary from LREC is directly attributable to the management services he performs for the Company as an employee of LREC pursuant to the Management Agreement.

The Company believes that the affiliated transactions are on terms comparable to those which would be obtained from unaffiliated persons.

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Neither of the two directors of the Company is independent pursuant to the definition of "independent director" set forth in the NYSE American Company Guide because both of them are executive officers of the Company. The Company does not have a separate designated audit, compensation or nominating committee or committee performing similar functions.

<u>Item 14. Principal Accountant Fees and Services</u>

Tax preparation fees were rendered by Milhouse & Neal, LLP, the principal accountant of the Company, for the years ended December 31, 2022 and 2021 as follows:

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| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
|  | ($ in thousands) | ($ in thousands) |
| Tax fees | $4 | $3 |

---

Tax fees are comprised of fees for tax compliance, tax planning, and tax advice. Corporate tax services encompass a variety of permissible services, including technical tax advice related to U.S. tax matters as well as preparation of applicable tax returns.

The Board of Directors of the Company pre-approved all review and other permissible services to be provided by Milhouse & Neal, LLP and BKD, LLP and the estimated fees for these services.

The Company's independent registered public accounting firm, BKD, LLP, declined to stand for re-engagement subsequent to the audit for Fiscal 2018. The Form 10-K for Fiscal 2018 was filed on February 25, 2019.

In April 2019, the Company engaged the accounting firm of Milhouse & Neal, LLP as independent accountants for the fiscal year ended December 31, 2019. Due to the inactive status of the Company and its diminishing financial resources, the Company elected not to engage the accounting firm of Milhouse & Neal, LLP to perform a review for the fiscal years ended December 31, 2022 and 2021.

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PART IV

<u>Item 15. Exhibits and Financial Statement Schedules</u>

1. The following financial statements and the report of independent registered public accounting firm are filed as part of this Report:

a. Report of Independent Registered Public Accounting Firm

b. Consolidated Statements of Financial Position as of December 31, 2022 and 2021

c. Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021

d. Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021

e. Consolidated Statements of Stockholders' Deficiency for the Years Ended December 31, 2022 and 2021

f. Notes to Consolidated Financial Statements

2. Financial statement schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and therefore have been omitted.

3. Exhibit Index

The following exhibits are filed or incorporated herein by reference and are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.

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| | |
|:---|:---|
| 2.  | Inapplicable. |
| 3.1(a)  | Restated Articles of Incorporation of PGI Incorporated executed September 4, 1998 with certificate from the State of Florida dated October 27, 1998 (filed as Exhibit 3.1 to Registrant's September 30, 1998 Form 10-QSB and incorporated herein by reference). |
| 3.1(b)  | Certificate of the Designation, Powers, Preferences and Relative Rights, and the Qualifications, Limitations or Restrictions Thereof, which have not been set forth in the Articles of Incorporation, of the Class A Cumulative Convertible Preferred Stock, effective as of March 24, 1987 (filed as Exhibit 3.2 to Registrant's Form 10-K Annual Report for the year ended December 31, 1986 ("1986 Form 10-K"). |
| [3.2](http://www.sec.gov/Archives/edgar/data/81157/000165495418005117/pgai_ex3ii.htm) | [Bylaws of PGI Incorporated and all amendments (filed as Exhibit 3.(ii) to the Registrant's March 31, 2018 Form 10-Q dated 5/11/18 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/81157/000165495418005117/pgai_ex3ii.htm) |
| [4.1](pgai_ex41.htm) | [Description of Registrant's Securities, filed herein](pgai_ex41.htm) |

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|:---|:---|
| 9.  | Inapplicable. |
| [10.1](http://www.sec.gov/Archives/edgar/data/81157/000165495416000552/pgi_ex101.htm) | [Purchase Agreement by and between Sugarmill Woods, Inc. and State of Florida, Department of Transportation, including addendum thereto, effective June 17, 2016 (filed as Exhibit 10.1 to the Registrant's Form 8-K current report dated June 23, 2016 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/81157/000165495416000552/pgi_ex101.htm) |
| [10.2](http://www.sec.gov/Archives/edgar/data/81157/000165495416000552/pgi_ex102.htm) | [Purchase and Sale Agreement (for Parcel No. 104) by and between Sugarmill Woods, Inc. and the State of Florida, Department of Transportation, including addendum thereto, effective June 17, 2016 (filed as Exhibit 10.2 to the Registrant's Form 8-K current report dated June 23, 2016 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/81157/000165495416000552/pgi_ex102.htm) |
| 10.3  | Form of Convertible Debenture Agreement due April 30, 1992 between PGI Incorporated and Love-1989 Florida Partners, L.P. and Mortgage and Security Agreement dated July 28, 1989 between Sugarmill Woods, Inc. and Love-1989 Florida Partners, L.P. (filed as Exhibit 10.9 to the Registrant's Form 10-K Annual Report for the year ended December 31, 1989). |
| 10.4  | Consulting Agreement between PGI Incorporated and Love Real Estate Company, dated as of March 25, 1987 (filed as Exhibit 10.7 to the 1986 Form 10-K). |
| 11.  | See Note 16 to the consolidated financial statements. |
| 13.  | Inapplicable. |
| 14.  | Inapplicable (See discussion regarding code of ethics under Item 10. of this Form 10-K). |
| 16.  | Inapplicable. |
| 18.  | Inapplicable. |
| [21.](pgai_ex21.htm) | [Subsidiaries of the Registrant, filed herein.](pgai_ex21.htm) |
| 22.  | Inapplicable. |
| 23.  | Inapplicable. |
| 24.  | Inapplicable. |
| [31(i).1](pgai_ex311.htm) | [Principal Executive Officer certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, filed herein.](pgai_ex311.htm) |
| [31(i).2](pgai_ex312.htm) | [Principal Financial Officer certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, filed herein.](pgai_ex312.htm) |

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| | |
|:---|:---|
| [32.1](pgai_ex321.htm) | [Principal Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herein.](pgai_ex321.htm) |
| [32.2](pgai_ex322.htm) | [Principal Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herein.](pgai_ex322.htm) |
| 33.  | Not applicable. |
| 34.  | Not applicable. |
| 35.  | Not applicable |
| 95.  | Not applicable. |
| [99.](http://www.sec.gov/Archives/edgar/data/81157/000165495422016958/pgai_ex991.htm) | [Unanimous Written Consent of the Officers and Directors of PGI Incorporated dated as of December 21, 2022 (filed as Exhibit 99.1 to the Registrant's Form 8-K dated December 27, 2022 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/81157/000165495422016958/pgai_ex991.htm) |
| 100.  | Not applicable. |
| 101.  | Instance Document, Schema Document, Calculation Linkbase Document, Labels Linkbase Document, Presentation Linkbase Document and Definition Linkbase Document.\* |

---

\*Furnished with this report.

Item 16. Form 10-K Summary

Not applicable.

---

| |
|:---|
| 42 |
| *[**Table of Contents**](#TOCMF)* |

---

PGI INCORPORATED AND SUBSIDIARIES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | PGI INCORPORATED (Registrant) | PGI INCORPORATED (Registrant) |
| Date: <u>March 31, 2023</u> | By: | /s/Laurence A. Schiffer |
|  |  | Laurence A. Schiffer, President<br>(Duly Authorized Officer and<br>Principal Executive Officer) |

---

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

---

| | | |
|:---|:---|:---|
| Signature | Title | Date |
| /s/Andrew S. Love | Chairman of the Board | March 31, 2023 |
| Andrew S. Love | Secretary |  |
| /s/Laurence A. Schiffer | Vice Chairman of the Board, | March 31, 2023 |
| Laurence A. Schiffer | President, Principal Executive<br>Officer, Principal Financial<br>Officer, and Principal Accounting<br>Officer |  |

---

## Exhibit 4.1

<u>**EXHIBIT 4.1**</u>

<u>Description of Registrant's Securities</u>

**Description of Common Stock**

The following description of our Common Stock (as defined below) is qualified in its entirety by reference to our Restated Articles of Incorporation (the "Articles of Incorporation") and our By-laws (the "Bylaws"), each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.1 is a part.

<u>Authorized Capital Shares.</u>

Our authorized capital shares consist of 25,000,000 shares of common stock, par value $.10 per share ("Common Stock") and 5,000,000 shares of preferred stock, par value $1.00 per share ("Preferred Stock").

<u>General</u>*.***

Each share of Common Stock has the same relative rights as, and is identical in all respects to, each other share of Common Stock. The outstanding shares of our Common Stock are fully paid and nonassessable.

<u>Voting Rights.</u> 

Each share of Common Stock entitles the holder thereof to one vote on all matters upon which stockholders have the right to vote. Our Common Stock does not have cumulative voting rights.

<u>Dividend Rights</u>*.*** 

No dividends have ever been paid on the Common Stock. Payment of dividends on the Common Stock is subject to the rights of the holders of outstanding shares of Preferred Stock to receive cumulative dividends, which rights are described in Note 11 to the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K of which this Exhibit 4.1 is a part. Payment of dividends on the Common Stock is also restricted under the terms of the two indentures (one of which matured on June 1, 1991 and the other on May 1, 1992) pursuant to which the Company's outstanding subordinated convertible debentures were issued, the terms of which debentures are further described in Note 8 to the Notes to Consolidated Financial Statements in Annual Report on Form 10-K of which this Exhibit 4.1 is a part.

<u>No Preemptive or Conversion Rights.</u> 

Holders of shares of our Common Stock do not have preemptive rights to purchase additional shares of our Common Stock and have no conversion or redemption rights.

<u>Liquidation Rights.</u> 

Subject to the liquidation preference of the holders of outstanding shares of Preferred Stock, which preference is described in Note 11 to the Notes to Consolidated Financial Statements in Annual Report on Form 10-K of which this Exhibit 4.1 is a part, in the event of our liquidation, dissolution, or winding up, the holders of shares of our Common Stock shall be entitled to share ratably in any assets legally available for distribution to holders of capital stock of the Company.

<u>Trading</u> 

There is no public trading market for the Company's Common Stock.

## Ex-21

<u>**EXHIBIT 21**</u>

<u>PGI INCORPORATED</u>

<u>SUBSIDIARIES</u>

---

| | | |
|:---|:---|:---|
|  | State of Incorporation | Relationship |
| Sugarmill Woods, Inc.  | Florida  | Wholly owned (1) |
| Burnt Store Marina, Inc.  | Florida  | Wholly owned (1) |
| Punta Gorda Isles Sales, Inc.  | Florida  | Wholly owned (1) |
| Burnt Store Utilities, Inc.  | Florida  | Wholly owned (1) |
| Gulf Coast Credit Corporation  | Florida  | Wholly owned (1) |

---

__________________________

(1) Included in the Company's consolidated financial statements.

## Exhibit 31.1

**EXHIBIT 31(i).1**

RULE 13a – 14(a)

<u>CERTIFICATION</u>

I, Laurence A. Schiffer, certify that;

1. I have reviewed this annual report on Form 10-K of PGI Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's accountants and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| /s/Laurence A Schiffer | March 31, 2023 |
| Laurence A. Schiffer<br> Principal Executive Officer |  |

---

## Exhibit 31.2

**EXHIBIT 31(i).2**

RULE 13a – 14(a)

<u>CERTIFICATION</u>

I, Laurence A. Schiffer, certify that;

1. I have reviewed this annual report on Form 10-K of PGI Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's accountants and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| /s/ Laurence A. Schiffer | March 31, 2023 |
| Laurence A. Schiffer<br> Principal Financial Officer |  |

---

## Exhibit 32.1

**EXHIBIT 32.1**

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350 \*

In connection with the Annual Report of PGI Incorporated (the "Company") on Form 10-K for the period ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Laurence A. Schiffer, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) , as applicable, of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| /s/ Laurence A. Schiffer |  |
| Laurence A. Schiffer<br> Chief Executive Officer (Principal Executive Officer) | March 31, 2023 |

---

\*A signed original of this written statement has been provided to the Company and will be retained by the Company and will be furnished to the Securities and Exchange Commission or its staff upon request.

## Exhibit 32.2

**EXHIBIT 32.2**

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350\*

In connection with the Annual Report of PGI Incorporated (the "Company") on Form 10-K for the period ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Laurence A. Schiffer, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| /s/ Laurence A. Schiffer |  |
| Laurence A. Schiffer<br> Chief Financial Officer (Principal Financial Officer) | March 31, 2023 |

---

\*A signed original of this written statement has been provided to the Company and will be retained by the Company and will be furnished to the Securities and Exchange Commission or its staff upon request.