SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   FORM 10-KSB
(Mark One)
(X)      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the fiscal year ended             December 31, 2002
                                   -------------------------------------------

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

         For the transition period from                  to
                                        -----------------   ------------------
         Commission file number                      1-6471
                                ----------------------------------------------

                                PGI, INCORPORATED
 -----------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

             Florida                                      59-0867335
------------------------------------------------------------------------------
(State or other jurisdiction of                  (IRS Employer Ident. No.)
 incorporation or organization)

212 S. Central, Suite 100;          St. Louis, Missouri            63105
------------------------------------------------------------------------------
         (Address of principal executive offices)                (Zip Code)

Issuer's Telephone Number, including area code:          (314) 512-8650
                                               -------------------------------

Securities registered pursuant to Section 12 (b) of the Exchange Act:
                                                     Name of each Exchange
         Title of Each Class                         on which Registered
         -------------------                         ---------------------
                  None                                        None
                  None                                        None

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

Common Stock, Par Value $.10 per share
6% Convertible Subordinated Debentures due 1992

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

         Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. (x)

         State the issuer's revenues for its most recent fiscal year. $313,000.
                                                                      --------

         The aggregate market value of voting stock held by non-affiliates of
the registrant cannot be determined. See page 4 of Form 10-KSB.

         State the number of shares outstanding of each of the Issuer's classes
of common equity as of the last practicable date.

         As of March 31, 2003, 5,317,758 shares of Common Stock $.10 par value
         ---------------------------------------------------------------------
were outstanding.
----------------

The Index to Exhibits is located on pages 40 to 44 of this report.






                           PGI INCORPORATED AND SUBSIDIARIES
                                 FORM 10 - KSB - 2002
                          Contents and Cross Reference Index


Part     Item                                                             Form 10-KSB
No.      No.      Description                                               Page No.
---      ----     -----------                                               --------

                                                                         
  I       1       Description of Business
                     General                                                   3
                     Recent Developments                                       3
          2       Description of Property                                      4
          3       Legal Proceedings                                            4
          4       Submission of Matters to a Vote of Security Holders          4
 II       5       Market for Common Equity and Related
                   Stockholder Matters                                       4 - 5
          6        Management's Discussion and Analysis or Plan of
                    Operation                                                5 - 10
          7       Financial Statements                                      11 - 29
          8       Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure                         29
III       9       Directors, Executive Officers, Promoters and Control
                   Persons; Compliance with Section 16 (a) of the
                   Exchange Act                                                30
         10       Executive Compensation                                       31
         11       Security Ownership of Certain Beneficial Owners and
                   Management and Related Stockholder Matters               31 - 32
         12       Certain Relationships and Related Transactions            32 - 35

 IV      13       Exhibits and Reports on Form 8-K                             36
         14       Controls and Procedures                                      36

Signatures                                                                     37
Certifications                                                              38 - 39

Exhibit Index                                                               40 - 44







                                     PART I
                                     ------

Item 1.     Description of Business
-------     -----------------------
GENERAL

         As used in this Annual Report on Form 10-KSB, the "Company" refers,
unless the context otherwise requires, to PGI Incorporated and its subsidiaries.
The Company's executive offices are at 212 S. Central, Suite 100, St. Louis,
Missouri, 63105, and its telephone number is (314) 512-8650.

         The Company was founded in 1958, and up until the mid 1990's was in the
business of building and selling homes, developing and selling homesites and
selling undeveloped or partially developed tracts of land. In the last 5 years
the Company's business focus and emphasis changed substantially as it
concentrated its sales and marketing efforts almost exclusively on the
disposition in bulk of its undeveloped, platted, residential real estate. This
change was prompted by its continuing financial difficulties due to the
principal and interest owed on its debt.

         Presently, the Company's remaining inventory mainly consists of 370
acres located in Hernando County, Florida. In addition, the Company has been
actively pursuing collection on delinquent contract receivables from homesite
sales. The Company owns approximately 44 lots, mostly located in Citrus County,
Florida, which are listed for sale.

         As of January 1, 2003 the Company had no employees, all services
provided to the Company are through contract services.

RECENT DEVELOPMENTS

         With the completion of the Suncoast Expressway to Highway 98 in 2001
and the anticipated further extension of the expressway beyond Highway 98 in
coming years, the Company believes the 370 acres located in Hernando County,
Florida may become more marketable because of the property's close proximity to
the interchange of the Suncoast Expressway with Highway 98.

         The Company has been actively pursuing repossession of lots with
delinquent contracts receivable. In the past year, 10 lots were reacquired by
obtaining quit claim deeds or through foreclosure. The Company is in the process
of foreclosing on 12 additional lots.



                                       -3-







Item 2.     Description of Property
-------     -----------------------

         The Company's primary investment in properties relates to its Sugarmill
Woods project comprising 370 acres of unimproved land located in Hernando
County, Florida near the interchange of the Suncoast Expressway and Highway 98.
Approximately 40 acres of the property have been approved for commercial use by
the Hernando County Commission. The Company generally has fee simple title to
this property, but substantially all of the Company's properties are encumbered
by mortgages under either its primary lender agreement with PGIP, LLC, or other
financing agreements. The property is adequately covered by liability insurance.

         The Suncoast Expressway opened during 2001. This new highway from Tampa
to the property cut the travel time by at least one third. The Company believes
this event will enhance the sale and/or ability to develop the property. The
Company will determine whether it can generate more revenue by developing and
selling individual commercial properties or by selling the land in bulk.

Item 3.     Legal Proceedings
-------     -----------------

         The Company is a party to a number of lawsuits incidental to the normal
operation of its business. Based upon information presently available, the
Company does not believe that the resolution of any of the suits individually,
or collectively, will have a material adverse effect on its financial position
(see Note 15 of Item 7).

Item 4.     Submission of Matters to a Vote of Security Holders
-------     ---------------------------------------------------

         A shareholders meeting was not held during the year 2002.

                                     PART II
                                     -------

Item 5.     Market for Common Equity and Related Stockholder Matters
-------     --------------------------------------------------------

         There is no public trading market for the Company's common equity
securities. Based on information received from the National Quotations Bureau,
Inc. there have been no reported transactions in the Company's common stock
since January 29, 1991. No dividends have ever been paid on the Common Stock,
and payment of dividends is restricted under the terms of the two indentures
pursuant to which the Company's outstanding debentures are issued. As of
December 31, 2002 there were 653 holders of record of the Company's Common Stock
and approximately 445 debenture holders.

         In an effort to reduce the number of shareholders of record of its
Common Stock to less than 500, the Board of Directors of the Company has
endorsed the tender offer by PGIP, LLC, an affiliate of the Company, to purchase
shares of the Company's Common Stock held by shareholders who hold 99 or fewer
shares of such Common Stock at a

                                       -4-





purchase price of $.50 per share. If, as a result of this tender offer, there
are less than 500 shareholders of record of the Common Stock, then the Company
intends to file a Form 15 with the Securities and Exchange Commission to
deregister the Common Stock from registration with the Securities and Exchange
Commission under Sections 12(g) and 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Concurrently, the Company also intends to
file a Form 15 with the Securities and Exchange Commission to deregister its 6%
Convertible Subordinated Debentures from registration with the Securities and
Exchange Commission under Sections 12(g) and 15(d) of the Exchange Act.

Item 6.     Management's Discussion and Analysis or Plan of Operation
-------     ---------------------------------------------------------

PRELIMINARY NOTE

         With the completion of the Suncoast Expressway to Highway 98 in 2001
and the anticipated further extension of the expressway in coming years, the
Company will evaluate whether it can generate more revenue by developing and
selling individual commercial properties or by selling land in bulk.

RESULTS OF OPERATIONS

         Revenues for the year ended December 31, 2002 increased by $154,000 to
$313,000 compared to revenues of $159,000 for the year ended December 31, 2001
mainly as a result of an increase in real estate sales. The net loss was
$2,240,000 ($.54 per share) for 2002 compared to a net loss of $2,150,000 ($.52
per share) for 2001. Included in the 2002 and 2001 earnings per share
computation is $640,000 ($.19 per share of Common Stock) of annual cumulative
preferred stock dividends in arrears.

Real Estate Activities
----------------------

         Sales and Cost of Sales for real estate operations for the years of
2002 and 2001 were:



                                            2002              2001
                                            ----              ----
                                               ($ in thousands)
                                                        
           Real Estate Sales                $238              $103
           Cost of Sales                      65                40
                                            ----              ----
           Gross Profit Margin              $173              $ 63
                                            ====              ====



                                       -5-




Item 6.     Management's Discussion and Analysis or Plan of Operation
-------     ---------------------------------------------------------
            (continued)
            -----------

Other Income Activities
-----------------------

         Interest income in 2002 increased by $7,000 to $48,000 from $41,000 in
2001 due to an increase in short term notes receivables.

         Other income for the years of 2002 and 2001 was:



                                            2002              2001
                                            ----              ----
                                               ($ in thousands)
                                                        
Other income                                $ 27              $ 15
                                            ====              ====


         Other income in 2002 increased by $12,000 compared to 2001.

Costs and Expenses
------------------

         Expenses for the years 2002 and 2001 were:



                                      2002              2001
                                      ----              ----
                                        ($ in thousands)
                                                
Taxes and Assessments               $122,000          $ 8,000
Consulting and Accounting             40,000           40,000
Legal and Professional                26,000           56,000
General and Administrative            51,000           57,000


         Taxes and assessments increased by $114,000 in 2002 due to the accrual
of $67,000 in tax penalties on 1997 taxes in litigation. In addition, the 2001
real estate taxes were reduced by $34,000 with the sale of a parcel of land sold
for delinquent taxes in Charlotte County.

         Interest expense for the two years ended December 31, 2002 and 2001
was:



                                           2002               2001
                                           ----               ----
                                              ($ in thousands)
                                                       
Interest Expense                          $2,249             $2,108


         Interest expense in 2002 increased by $141,000 compared to 2001.


                                       -6-





Item 6.     Management's Discussion and Analysis or Plan of Operation
-------     ---------------------------------------------------------
            (continued)
            -----------

FINANCIAL CONDITION

         Assets increased at December 31, 2002 compared to assets at December
31, 2001 reflecting the following changes:



                                                                         Increase
                                     2002              2001             (Decrease)
                                     ----              ----              --------
                                                  ($ in thousands)
                                                                  
Cash and Cash Equivalents           $   93            $  234               (141)
Restricted Cash                          1               260               (259)
Receivables                            580               130                450
Land and Improvement                   718               737                (19)
Other Assets                           160               173                (13)
                                    ------            ------               ----
                                    $1,552            $1,534                 18
                                    ======            ======               ====


         Cash decreased by $141,000 to $93,000 at December 31, 2002 compared to
$234,000 at December 31, 2001. Net cash provided by operations was $59,000 for
the year ended December 31, 2002 compared to net cash used in operations of
$114,000 for the year ended December 31, 2001.

         Cash received from operations during 2002 was $291,000, a $151,000
increase from cash received during 2001.

         Cash expended for operations decreased by $22,000 to $232,000 during
2002 from $254,000 in 2001, reflecting decreases in the following
classifications; consulting and accounting ($7,000), legal and professional
($25,000), general and administrative ($19,000), and increases in real estate
operations ($17,000) and interest payments ($12,000).

         The $200,000 used in investing activities during 2002 included $440,000
in advances to Love Investment Company and $7,000 in expenditures relating to
inventory and deferred expenditures offset by $242,000 in proceeds from the
release of restricted cash and $5,000 in proceeds from notes receivable.

         The $106,000 used in investing activities during 2001 included $100,000
in advances to Love Investment Company and $11,000 in expenditures relating to
inventory and deferred expenditures offset by $5,000 in proceeds from notes
receivable.

         In order to satisfy its debt obligations, the Company has been and
intends to continue to:
         -  actively seek buyers for the remaining portion of the undeveloped
            acreage, when appropriate;
         -  diligently pursue collection of its receivables; and
         -  sell the remaining lots.

                                       -7-





Item 6.     Management's Discussion and Analysis or Plan of Operation
-------     ---------------------------------------------------------
            (continued)
             ---------

         No assurances can be made that the Company can achieve any of the three
above alternatives.

         A comparison of the contract receivable delinquency status at December
31, 2002 and 2001 follows:



                                    2002       %               2001       %
                                    ----     -----             ----     -----
                                                ($ in thousands)
                                                            
Current                              $ -       -               $  -         -
31 to 90 days delinquent               -       -                  -         -
Over 90 days                         $71     100.0             $177     100.0
                                     ---     -----             ----     -----
         Total delinquents           $71     100.0             $177     100.0
                                     ---     -----             ----     -----
         Total contracts             $71     100.0             $177     100.0
                                     ===     =====             ====     =====


         Contracts receivable on homesite sales and related receivables are
fully provided for cancellation at December 31, 2002 and 2001. The Company has
experienced deterioration in the quality of the contracts receivable portfolio
over the past several years. The Company believes the deterioration is the
result of the adverse publicity regarding community developers, as well as the
difficulty of implementing contract collection activities for foreign
receivables.

         Liabilities were approximately $32,200,000 at December 31, 2002
compared to approximately $29,900,000 at December 31, 2001, reflecting the
following changes:



                                                                             Increase
                                              2002              2001        (Decrease)
                                              ----              ----         --------
                                                          ($ in thousands)
                                                                     
Accounts payable and accrued expenses       $    56           $    73         $  (17)
Accrued real estate taxes                       436               382             54
Accrued interest                             19,225            17,004          2,221
Credit agreements - primary
  lender                                        700               700              -
Notes payable                                 1,198             1,198              -

Convertible subordinated
  debentures payable                          9,059             9,059              -
Convertible debentures payable                1,500             1,500              -
                                            -------           -------         ------
                                            $32,174           $29,916         $2,258
                                            =======           =======         ======


                                       -8-




Item 6.     Management's Discussion and Analysis or Plan or Operation
-------     ---------------------------------------------------------
            (continued)
            -----------

         The $2,221,000 increase in accrued interest at December 31, 2002
compared to year-end 2001 reflects changes in the following:



                                                                               Increase
                                                       2002         2001      (Decrease)
                                                       ----         ----       --------
                                                              ($ in thousands)
                                                                       
Primary Lender                                       $    40      $     -       $   40
Debentures                                            17,098       14,995        2,103
Other                                                  2,087        2,009           78
                                                     -------      -------       ------
                                                     $19,225      $17,004       $2,221
                                                     =======      =======       ======


         The accrued interest relating to debentures increased due to the
nonpayment of interest on the Company's debentures (see Notes 10 and 11 to the
consolidated financial statements under Item 7).

         The Company's capital deficiency increased to $30,622,000 at December
31, 2002 from a $28,382,000 capital deficiency at December 31, 2001, reflecting
the 2002 operating loss.

         As of the date of this filing, the Company is in default of the entire
principal plus interest on its subordinated debentures payable in amounts
indicated in the following table:



                                                          12/31/2002
                                                          ----------
                                                Principal            Unpaid
                                               Amount Due           Interest
                                               ----------           --------
                                                      ($ in thousands)
                                                               
Subordinated debentures due June 1, 1991         $1,034              $  897
Subordinated debentures due May 1, 1992           8,025               8,330
                                                 ------              ------
                                                 $9,059              $9,227
                                                 ======              ======


         The Company does not have funds available to make any payments of
either principal or interest on the above debentures. (See Notes 9, 10 and 11 to
the consolidated financial statements under Item 7). Since the Company assets
are encumbered by mortgages, the secured lenders have a perfected security
interest and priority over the unsecured debenture holders.

New Accounting Standards
------------------------

         The Financial Accounting Standards Board (FASB) issued SFAS 143,
"Accounting for Asset Retirement Obligations" in June, 2001. This Statement
requires an entity to record a liability for an obligation associated with
the retirement of an asset at the time the liability is incurred by
capitalizing the cost as part of the carrying value of the related asset and
depreciating it over the remaining useful life of the asset. SFAS 143 is
effective for fiscal years

                                       -9-





Item 6.     Management's Discussion and Analysis or Plan of Operation
-------     ---------------------------------------------------------
            (continued)
            -----------

beginning after June 15, 2002. Management has determined that implementation of
SFAS 143 will not have an effect on the Company's financial statements.

         The FASB issued SFAS 144, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" in August,
2001. This Statement addresses how and when to measure impairment on
long-lived assets and how to account for long-lived assets that an entity
plans to dispose of either through sale, abandonment, exchange or
distribution to owners. The Statement also requires expected future operating
losses from discontinued operations to be recorded in the period in which the
losses are incurred rather than the measurement date. SFAS 144 is effective
for fiscal years beginning after December 15, 2001. Management has determined
that implementation of SFAS 144 will not have an effect on the Company's
financial statements.

         In June 2002, the FASB issued SFAS 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This Statement addresses the
reporting that a liability for a cost associated with an exit or disposal
activity be recognized and measured initially at fair value only when the
liability is incurred.

         SFAS 146 is effective for exit or disposal activities that are
initiated after December 31, 2002. Management will consider the requirements
of SFAS 146 if exit or disposal activities occur in the future.
Implementation of the Statement does not have an effect on the Company's
current financial statements.

                                      -10-





Item 7.     Financial Statements
-------     --------------------
            Independent Accountants' Report
            -------------------------------

The Stockholders and Board of Directors
PGI, Incorporated
St. Louis, Missouri

We have audited the accompanying consolidated statements of financial position
of PGI Incorporated and subsidiaries as of December 31, 2002 and 2001, and the
related consolidated statements of operations, stockholders' deficiency and cash
flows for each of the two years in the period ended December 31, 2002. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of PGI Incorporated and
subsidiaries at December 31, 2002 and 2001, and the results of its operations
and its cash flows for each of the two years in period ended December 31, 2002,
in conformity with accounting principles generally accepted in the United States
of America.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 10 to the financial
statements, the Company is currently in default of certain sinking fund and
interest payments on its convertible subordinated debentures. The Company has a
significant accumulated deficit, and is in default of its primary debt (Note 9),
certain sinking fund and interest payments on its convertible subordinated
debentures (Note 10) and its convertible debentures (Note 11). These matters
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in this regard are described in Note 10. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


                                             /s/ BKD, LLP
St. Louis, Missouri
February 5, 2003

                                      -11-






                                              PGI INCORPORATED AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                                  December 31, 2002 and 2001




                                          ASSETS                                         LIABILITIES
                                          ======                                         ===========
                                     2002          2001                                                2002            2001
                                     ----          ----                                                ----            ----

                                                                                                   
Cash and cash equivalents        $   93,000     $  234,000    Accounts payable
                                                               and accrued expenses (Note 8)       $     56,000   $     73,000
Restricted cash (Note 3)              1,000        260,000
                                                              Accrued real estate
Receivables on real estate                                     taxes (Note 8)                           436,000        382,000
 sales-net (Note 4)                       -         16,000

Other receivables                   580,000        114,000    Accrued interest:
Land and improvement                                          Primary Lender                             40,000              -
 inventories (Note 5)               718,000        737,000    Debentures                             17,098,000     14,995,000
                                                              Other                                   2,087,000      2,009,000
Other assets (Note 7)               160,000        173,000
                                                              Credit Agreements - (Note 9)
                                                                 Primary lender                         700,000        700,000
                                                                 Notes payable                        1,198,000      1,198,000
                                                              Subordinated convertible
                                                               debentures payable (Note 10)           9,059,000      9,059,000

                                                              Convertible debentures
                                                               payable (Note 11)                      1,500,000      1,500,000
                                                                                                   ------------   ------------

                                                                                                     32,174,000     29,916,000
                                                                                                   ------------   ------------
                                                              Commitments and contingencies
                                                               (Note 15)
                                                              STOCKHOLDERS' DEFICIENCY
                                                              ------------------------
                                                              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 13)                   2,000,000      2,000,000

                                                              Common stock, par value
                                                               $.10 per share; authorized
                                                               25,000,000 shares; 5,317,758
                                                               shares issued and outstanding
                                                               (Note 13)                                532,000        532,000
                                                              Paid-in capital                        13,498,000     13,498,000
                                                              Accumulated deficit                   (46,652,000)   (44,412,000)
                                                                                                   ------------   ------------
                                                                                                    (30,622,000)   (28,382,000)
                                 ----------     ----------                                         ------------   ------------
                                 $1,552,000     $1,534,000                                         $  1,552,000   $  1,534,000
                                 ==========     ==========                                         ============   ============

                                 See accompanying notes to consolidated financial  statements.


                                      -12-





                             PGI INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF OPERATIONS
                           Years ended December 31, 2002 and 2001


                                                         2002                       2001
                                                         ----                       ----
                                                                           
Revenues:
         Real estate sales (Note 2)                   $   238,000                $   103,000
         Interest income                                   48,000                     41,000
         Other income (Note 2)                             27,000                     15,000
                                                      -----------                -----------
                                                          313,000                    159,000
                                                      -----------                -----------

Costs and expenses:
         Cost of real estate sales (Note 2)                65,000                     40,000
         Interest                                       2,249,000                  2,108,000
         Taxes and assessments                            122,000                      8,000
         Consulting and accounting                         40,000                     40,000
         Legal and professional                            26,000                     56,000
         General and administrative                        51,000                     57,000
                                                      -----------                -----------
                                                        2,553,000                  2,309,000
                                                      -----------                -----------

Net (Loss)                                            $(2,240,000)               $(2,150,000)
                                                      ===========                ===========

(Loss) Per Share Available to Common
  Stockholders - Basic and Diluted (Note 18)             (.54)                      (.52)
                                                         ====                       ====

                See accompanying notes to consolidated financial statements.



                                      -13-






                            PGI INCORPORATED AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                         Years ended December 31, 2002 and 2001


                                                                   2002            2001
                                                                   ----            ----
                                                                          
Cash flows from operating activities:

Cash received from operations:
   Collections from real estate sales and
    receivables on such sales                                   $ 252,000       $  97,000
   Interest received                                               12,000          23,000
   Other operating receipts                                        27,000          20,000
                                                                ---------       ---------
                                                                  291,000       $ 140,000
                                                                ---------       ---------
Cash expended for operations:
   Payments for real estate sales                                  30,000          13,000
   Interest paid                                                   12,000               -
   Taxes and assessments                                           65,000          65,000
   Consulting and accounting                                       35,000          42,000
   Legal and professional                                          41,000          66,000
   General and administrative                                      49,000          68,000
                                                                ---------       ---------
                                                                  232,000         254,000
                                                                ---------       ---------
Net cash flow provided by (used in)
 operating activities                                              59,000        (114,000)
                                                                ---------       ---------

Cash flows from investing activities:
   Purchases of inventory and deferred expenditures                (7,000)        (11,000)
   Proceeds from release of restricted cash                       242,000               -
   Payments for other receivables                                (440,000)       (100,000)
   Proceeds from notes receivable                                   5,000           5,000
                                                                ---------       ---------
Net cash flow provided by investing activities                   (200,000)       (106,000)
                                                                ---------       ---------

Net (decrease) increase in cash and cash equivalents             (141,000)       (220,000)

Cash and cash equivalents at beginning of year                    234,000         454,000
                                                                ---------       ---------
Cash and cash equivalents at end of year                        $  93,000       $ 234,000
                                                                =========       =========

Non-cash investing and financing activities:
   Earnings capitalized into restricted cash                    $   2,000       $  12,000
                                                                ---------       ---------
   Interest paid from restricted cash                           $  17,000       $  85,000
                                                                ---------       ---------
   Expenses paid from restricted cash                           $   2,000       $       -
                                                                ---------       ---------


              See accompanying notes to consolidated financial statements.

                                      -14-





                                PGI INCORPORATED AND SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                              Years ended December 31, 2002 and 2001

                                                                 2002                      2001
                                                                 ----                      ----
                                                                                  
Reconciliation of net (loss) to net cash (used in)
 operating activities:

Net (loss)                                                    $(2,240,000)              $(2,150,000)

Adjustments to reconcile net (loss) to net cash
 (used in) operating activities:
   Earnings capitalized into restricted cash                       (2,000)                  (12,000)
   Interest released from restricted cash                          17,000                    85,000
   Expenses paid from restricted cash                               2,000                         -

(Increase) decrease in assets:
   Other receivables                                              (15,000)                   14,000
   Land and improvement inventories - net                          35,000                    28,000
   Prepaid expenses & deposits                                      4,000                    (3,000)
   Increase (decrease) in liabilities:
   Accounts payable and accrued expenses                          (17,000)                  (39,000)
   Accrued real estate taxes                                       54,000                   (60,000)
   Accrued interest                                             2,221,000                 2,023,000
                                                              -----------               -----------

Net cash flow provided by (used in)
 operating activities                                         $    59,000               $  (114,000)
                                                              ===========               ===========

                    See accompanying notes to consolidated financial statements.


                                      -15-






                                                 PGI INCORPORATED AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
                                              Years ended December 31, 2002 and 2001


                                   Preferred Stock                    Common Stock                                      Retained
                                   ---------------                    ------------                                      Earnings
                              Shares          Par Value         Shares          Par Value       Paid-In Capital         (Deficit)
                              ------          ---------         ------          ---------       ---------------         ---------
                                                                                                    
Balances at 1/1/01          2,000,000        $2,000,000        5,317,758         $532,000         $13,498,000         $(42,262,000)

Net Loss                            -                 -                -                -                   -           (2,150,000)
                            ---------        ----------        ---------         --------         -----------         ------------
Balances at 12/31/01        2,000,000        $2,000,000        5,317,758         $532,000         $13,498,000         $(44,412,000)

Net Loss                            -                 -                -                -                   -           (2,240,000)
                            ---------        ----------        ---------         --------         -----------         ------------
Balances at 12/31/02        2,000,000        $2,000,000        5,317,758         $532,000         $13,498,000         $(46,652,000)
                            =========        ==========        =========         ========         ===========         ============

                                   See accompanying notes to consolidated financial statements.


                                      -16-





                        PGI INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       Significant Accounting Policies:
         -------------------------------
Principles of Consolidation
---------------------------

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

Accounting Estimates
--------------------

         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. Actual results could differ from those estimates.

Revenue and Profit Recognition
------------------------------

Homesites
---------

         The Company adopted the installment method of profit recognition in
accordance with Statement of Financial Accounting Standard No. 66 "Accounting
for Sales of Real Estate".

Acreage
-------

         Sales of undeveloped and developed acreage tracts are recognized, net
of any deferred revenue and valuation discount, when minimum down payment and
other requirements are met.

Land and Improvement Inventories
--------------------------------

         Land held for sale to customers and land held for bulk sale are stated
at cost, which is not in excess of estimated net realizable value. Homesite
costs are allocated to projects based on area methods, which consider footage,
future improvements costs and frontage.

Property and Equipment
----------------------

         Property and equipment are stated at cost. Depreciation is provided
principally by the straight-line method over the estimated useful lives of the
related assets. Gains or losses resulting from the disposition of property and
equipment are respectively included in other income and other expense.

                                      -17-





                        PGI INCORPORATED AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

Cash and Cash Equivalents
-------------------------

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

New Accounting Standards
------------------------

         The Financial Accounting Standards Board (FASB) issued SFAS 143,
"Accounting for Asset Retirement Obligations" in June, 2001. This Statement
requires an entity to record a liability for an obligation associated with
the retirement of an asset at the time the liability is incurred by
capitalizing the cost as part of the carrying value of the related asset and
depreciating it over the remaining useful life of the asset. SFAS 143 is
effective for fiscal years beginning after June 15, 2002. Management has
determined that implementation of SFAS 143 will not have an effect on the
Company's financial statements.

         The FASB issued SFAS 144, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" in August,
2001. This Statement addresses how and when to measure impairment on
long-lived assets and how to account for long-lived assets that an entity
plans to dispose of either through sale, abandonment, exchange or
distribution to owners. The Statement also requires expected future operating
losses from discontinued operations to be recorded in the period in which the
losses are incurred rather than the measurement date. SFAS 144 is effective
for fiscal years beginning after December 15, 2001. Management has determined
that implementation of SFAS 144 will not have an effect on the Company's
financial statements.

         In June 2002, the FASB issued SFAS 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This Statement addresses the
reporting that a liability for a cost associated with an exit or disposal
activity be recognized and measured initially at fair value only when the
liability is incurred.

         SFAS 146 is effective for exit or disposal activities that are
initiated after December 31, 2002. Management will consider the requirements
of SFAS 146 if exit or disposal activities occur in the future.
Implementation of the Statement does not have an effect on the Company's
current financial statements.

                                      -18-





                        PGI INCORPORATED AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)


2.       Real Estate Sales and Other Income:
         ----------------------------------

Real estate sales and cost of sales consisted of:



                                              2002              2001
                                              ----              ----

                                                        
         Homesites Sales                    $238,000          $103,000
         Cost of Sales                        65,000            40,000
                                            --------          --------
         Gross Profit Margin                $173,000          $ 63,000
                                            ========          ========


Other income for the years of 2002 and 2001 was:


                                              2002              2001
                                              ----              ----

                                                        
         Other income                       $ 27,000          $ 15,000
                                            ========          ========


3.       Restricted Cash:
         ---------------

         Restricted cash includes restricted proceeds held by the primary lender
as collateral for debt repayment and escrowed receipts related to sold contracts
receivable.

         The primary lender utilized restricted funds to pay the interest due on
the primary lender debt of $17,000 and $85,000 in 2002 and 2001, respectively.

         The Company utilized $239,000 of the primary lender (PGIP, LLC, an
affiliate) restricted escrow in April, 2002 to invest in short term notes with
Love Investment Company who is affiliated with L-PGI, the Company's preferred
shareholder.


                                      -19-




                        PGI INCORPORATED AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         Restricted cash of $3,000 relating to sold contracts receivable was
released in June, 2002 after $2,000 was applied toward related expenses.

4.       Receivables on Real Estate Sales:
         --------------------------------

         Net receivables on real estate consisted of:



                                              2002              2001
                                              ----              ----

                                                        
Contracts receivable on homesite sales      $ 71,000          $ 177,000
Other                                              -             16,000
                                            --------          ---------
                                            $ 71,000          $ 193,000
Less: Allowance for cancellations            (71,000)          (177,000)
                                            --------          ---------
                                            $      0          $  16,000
                                            ========          =========


         The Company generally considers receivables on real estate sales
delinquent if the scheduled installment payment is over 30 days past due. At
December 31, 2002 and 2001 delinquent receivables approximated $71,000 and
$177,000 respectively.

         Contracts receivable on homesite sales and related receivables are
fully provided for cancellation at December 31, 2002 and 2001. The Company has
been actively pursuing collection on the delinquent receivables. An assessment
is made for each contract receivable as to the economic benefit of reacquisition
of the lot considering the cost of foreclosure, delinquent taxes and association
fees due, and estimated current sale value of the lot. For those with benefit,
foreclosure action is begun in the absence of payment or receipt of a quit claim
deed of the property back to the Company. Ten lots and three lots were
reacquired through foreclosure during 2002 and 2001, respectively.

         At December 31, 2001, 67% of the Company's receivables from real estate
sales represented customers who maintain foreign status, and 1% represented
accounts which are IRA's.

         Other receivables relating to real estate sales at December 31, 2001
mainly represents receivables on lot sales which occurred in December, 2001.

5.       Land and Improvements:
         ---------------------

         Land and improvement inventories consisted of:


                                              2002              2001
                                              ----              ----

                                                        
            Unimproved land                 $613,000          $613,000
            Fully improved land              105,000           124,000
                                            --------          --------
                                            $718,000          $737,000
                                            ========          ========



                                      -20-





                        PGI INCORPORATED AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

6.       Property and Equipment:
         ----------------------

         Property and equipment consisted of:


                                                  2002              2001
                                                  ----              ----

                                                            
            Furniture, fixtures and other       $ 31,000          $ 31,000
             equipment
            Less accumulated depreciation        (31,000)          (31,000)
                                                --------          --------
                                                $      -          $      -
                                                ========          ========


7.       Other Assets:
         ------------

         Other assets consisted of:


                                                  2002              2001
                                                  ----              ----

                                                            
            Deposit with Trustee of 6 1/2%
             debentures                         $160,000          $158,000
            Other                                      -            15,000
                                                --------          --------
                                                $160,000          $173,000
                                                ========          ========


8.       Accounts Payable and Accrued Expenses:
         -------------------------------------

         Accounts payable and accrued expenses consisted of:


                                                  2002              2001
                                                  ----              ----

                                                            
            Accounts payable                    $27,000           $48,000
            Accrued audit/tax expense            23,000            24,000
            Accrued consulting fees               5,000                 -
            Accrued legal expense                     -             1,000
            Accrued insurance                     1,000                 -
                                                -------           -------
                                                $56,000           $73,000
                                                =======           =======


         Accrued Real Estate Taxes:
         --------------------------

         Accrued real estate taxes consisted of:

                                                            
            Current                             $ 17,000          $ 18,000
            Delinquent                           419,000           364,000
                                                --------          --------
                                                $436,000          $382,000
                                                ========          ========



                                      -21-





                        PGI INCORPORATED AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

9.       Credit Agreements - Primary Lender and Notes Payable:
         ----------------------------------------------------

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


                                                        2002             2001
                                                        ----             ----

                                                                 
         Credit agreements - primary lender
          (Balance is past due, bearing interest at
          prime plus 5.0%):                          $  700,000        $  700,000

         Notes payable -
          $1,176,000 bearing interest at prime
          rate plus 2%, the remainder bearing
          interest at 12%, all past due               1,198,000         1,198,000
                                                     ----------        ----------
                                                     $1,898,000        $1,898,000
                                                     ==========        ==========


The prime rate at December 31, 2002 and 2001 was 4.25% and 4.75% respectively.

         At December 31, 2002 assets collateralizing the Company's credit
agreements with its primary lender and notes payable totaled $778,000, of which
$1,000 represented escrow held by the primary lender, $71,000 represented gross
receivables on real estate sales, $4,000 represented other receivables, and
$702,000 represented land and improvement inventories.

         The overall weighted average interest rate for the Company's credit
agreements with its primary lender and all remaining notes and mortgages was
approximately 7.75% as of December 31, 2002 and 10.0% as of December 31, 2001.

         Although substantially all of the Company's real and personal property
including all of the stock of the Company's wholly-owned subsidiaries remains
pledged as collateral, the Company negotiated agreements with its mortgage
holders to allow the Company to sell part of its land holdings without requiring
full payment of the secured debt.

         All of the primary lender debt and notes payable are past due.

10.      Subordinated Convertible Debentures Payable:
         --------------------------------------------

         Subordinated debentures payable consisted of:



                                                        2002              2001
                                                        ----              ----

                                                                 
            6 1/2%, due June 1991                    $1,034,000        $1,034,000
            6%, due May 1992                          8,025,000         8,025,000
                                                     ----------        ----------
                                                     $9,059,000        $9,059,000
                                                     ==========        ==========


                                      -22-





                        PGI INCORPORATED AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         Since issuance, $650,000 and $152,000 of the 6 1/2% and 6% debentures,
respectively, have been converted into common stock; however, this conversion
feature is no longer in effect.

         The Company is in default of certain sinking fund and interest payments
on both subordinated debentures totaling $9,059,000 in principal plus accrued
and unpaid interest of $9,227,000 at December 31, 2002 and $8,330,000 as of
December 31, 2001.

         The debentures are not collateralized and are not subordinated to
each other, but are subordinated to senior indebtedness ($3,398,000 at
December 31, 2002). 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.

         In order to satisfy the obligation to debenture holders, the Company
has been and intends to continue to:

- actively seek buyers for the remaining portion of the undeveloped acreage,
  when appropriate;
- diligently pursue collection of its receivables; and
- sell the remaining lots.

         No assurances can be made that the Company can achieve any of the three
above alternatives.

11.      Convertible Debentures Payable:
         -------------------------------

         In July and September 1989, the Company sold $1,282,000 and $1,000,000
respectively, of convertible debentures to a partnership affiliated with the
Company's preferred shareholder. In connection with the July 1992 Secured Lender
Transaction in partial consideration for the conveyance of 350 acres of
property, the principal amount due to convertible debenture holders was reduced
by $782,000 and accrued interest thereon was reduced by $389,000 leaving a
balance of $1,500,000. The maturity date on all the remaining debentures was
extended to July 8, 1997 so that the debentures are in default. The past due
debentures accrue interest at 14% compounded quarterly. The Company's primary
lender credit agreements, however, prohibit the payment of interest until such
time as the primary lender loans are repaid. At maturity the Convertible
Debentures purchased on July 24, 1989, were convertible into 868,788 common
shares and those purchased on September 29, 1989, were convertible into
1,726,568 common shares, or a total of 2,595,356 shares of common stock at an
initial conversion price of $1.72 per share. The conversion price may be
adjusted upon the occurrence of certain events.

                                      -23-





                        PGI INCORPORATED AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         The debentures held by Love-1989 Florida Partners, L.P., which total
$796,950 in principal amount are secured by a second mortgage behind PGIP, LLC
on the approximate 370 acres retained by the Company and a security interest
behind that held by PGIP, LLC in the restricted proceeds escrow.

         Accrued interest was $7,870,000 and $6,665,000 at December 31, 2002 and
2001 respectively.

12.      Income Taxes:
         -------------

         Reconciliation of the statutory federal income tax rates, 34% for the
years ended December 31, 2002 and 2001, to the Company's effective income tax
rates follows:



                                                  2002                               2001
                                                  ----                               ----
                                                             ($ in thousands)
                                    Amount of tax     Percent of       Amount of tax       Percent of
                                    -------------    Pre-tax Loss      -------------      Pre-tax Loss
                                                     ------------                         ------------
                                                                                
Expected tax (credit)                   $(762)          (34.0)%           $(731)            (34.0)%
State income taxes, net of
  federal tax benefits                    (90)           (4.0)%             (86)             (4.0)%
Increase in valuation allowance
  and expiring credits                    852            38.0%              817              38.0%
                                        -----           -----             -----             -----
  operating loss                        $   -               -             $   -                 -
                                        =====           =====             =====             =====


         At December 31, 2002, the Company had an operating loss carry forward
of approximately $30,000,000 which will expire at various dates through 2022.



                                                      2002              2001
                                                      ----              ----
                                                         ($ in thousands)
                                                                
Deferred tax asset:
  Net operating loss carryover                      $ 11,980          $ 15,120
  Adjustments to reduce land to net
   realizable value                                       12                12
  Expenses capitalized under IRC 263(a)                   56                56
  ITC carry forward                                        -                 -
  Valuation allowance                                (11,876)          (15,016)
                                                    --------          --------
                                                    $    172          $    172
Deferred tax liability:
  Basis difference of land and
   improvement inventories                          $    172          $    172
                                                    --------          --------

Net deferred tax asset                              $      -          $      -
                                                    ========          ========


                                      -24-





                        PGI INCORPORATED AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

13.      Capital Stock:
         -------------

         In March 1987, the Company sold, in a private placement 1,875,000
shares of its Class A cumulative convertible preferred stock to Love-PGI
Partners, L.P. ("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, 2002 cumulative
preferred dividends in arrears totaled $4,915,000 ($640,000 of which related to
the year ended December 31, 2002). On May 15, 1997 preferred dividends accrued
through April 25, 1995 totaling $4,260,433 were paid in the form of 2,000,203
shares of common stock.

         As of December 31, 2002, 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, 2002 the Company had reserved 6,355,356 common shares
for the conversion of preferred stock and debentures.

         In an effort to reduce the number of shareholders of record of its
Common Stock to less than 500, the Board of Directors of the Company has
endorsed the tender offer by PGIP, LLC, an affiliate of the Company, to purchase
shares of the Company's Common Stock held by shareholders who hold 99 or fewer
shares of such Common Stock at a purchase price of $.50 per share. If, as a
result of this tender offer, there are less than 500 shareholders of record of
the Common Stock, then the Company intends to file a Form 15 with the Securities
and Exchange Commission to deregister the Common Stock from registration with
the Securities and Exchange Commission under Sections 12(g) and 15(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act").
Concurrently, the Company also intends to file a Form 15 with the Securities and
Exchange Commission to deregister its 6% Convertible Subordinated Debentures
from registration from the Securities and Exchange Commission under Section
12(g) and 15(d) of the Exchange Act.
                                      -25-






                        PGI INCORPORATED AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

14.      Quarterly Results:
         ------------------

         In the fourth quarter of 2002 the Company accrued $67,000 in tax
penalties on 1997 real estate taxes in litigation.

15.      Commitments and Contingencies:
         ------------------------------

         The Company is a party to various legal proceedings incidental to the
normal operation of its business.

         One instance of litigation involves Sugarmill Woods, Inc. and Citrus
County Tax Collector. In 1994, the Citrus County Tax Appraiser denied
agricultural exemption status for the undeveloped Sugarmill Woods property and
the Company was forced to sue the County to reclaim the tax benefit. In 1995,
the Citrus County Tax Appraiser again denied agricultural exemption status for
the undeveloped Sugarmill Woods property, but was overruled by the Value
Adjustment Board. As a result, the Tax Appraiser sued Sugarmill Woods, and was
again successful in denying the agricultural exemption for the property. The
Company won on appeal, but the Tax Assessor appealed to the Supreme Court of
Florida to reinstate the exemption. On April 1, 1999, the Supreme Court of
Florida issued their opinion in favor of Sugarmill Woods, Inc. On November 9,
1999 the Circuit Court of Citrus County adjudged the agricultural classification
applicable to tax years 1994, 1995 and 1996 for exemption. The restricted escrow
of $557,000 was released in October, 2000 with the confirmation of no further
liability for tax years 1994, 1995 and 1996. Tax year 1997 remains in dispute on
a matter of timely filing of petition for exemption. In June 2002 the District
Court of Appeals denied the agricultural exemption for 1997 and the Company
filed a motion for rehearing which was denied. The Company is now seeking relief
from the final judgement before trial court.

         The aggregate outstanding balances of receivables sold or exchanged
with recourse by the Company was satisfied in 2002 and totaled approximately
$17,000 at December 31, 2001. Based on its collateral experience with such
receivables, the Company maintained no allowance at December 31, 2001.

16.      Related Party Transactions:
         ---------------------------

         As of December 31, 2002 the Company was in default of its primary
credit agreements with PGIP, LLC ("PGIP").

                                      -26-





                        PGI INCORPORATED AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

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

         The Company maintains its administration and accounting offices with
Love Real Estate Company ("LREC"). LREC, which is an affiliate of L-PGI, the
Company's preferred shareholder, is paid a monthly fee for the following:

         1. Maintain books of original entry;
         2. Prepare quarterly and annual SEC filings;
         3. Coordinate the annual audit;
         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

         In addition, the Company receives office space, telephone service and
computer service from LREC. A fee of $2,800 per month was paid to LREC in 2002
and 2001.

         Effective March 25, 1987, the Company entered into a Management
Consulting Agreement with LREC. As a consultant to the Company and in addition
to the above services, LREC provides 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 pays LREC a quarterly
consulting fee of one-tenth of one per cent of the book value of the Company's
assets, plus reasonable out-of-pocket expenses. As of December 31, 2002, the
book value of the Company's assets was approximately $1,552,000. Consulting fees
totaling $6,000 and $7,000 were accrued during 2002 and 2001 respectively. The
Company made payments of $1,000 in 2002 and $7,000 in 2001 for consulting fees.
As of December 31, 2002, a total of $5,000 of unpaid fees had accrued under this
agreement. There were no unpaid fees at December 31, 2001.

         In 1985 a corporation owned by the former Chairman of the Board and his
family made an uncollateralized loan to the Company, which at December 31, 2002
had an outstanding balance, including accrued interest of $458,000. Interest
accrued on this loan for years 2002 and 2001 was $12,000 and $16,000
respectively.

                                      -27-





                        PGI INCORPORATED AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         From time to time, the Company invests in short-term debt obligations
of an affiliate of L-PGI, the Company's preferred shareholder, Love Investment
Company. The balance receivable at December 31, 2002 and 2001 was $540,000 and
$100,000 respectively. Interest on the loans was $36,000 and $3,000 for 2002
and 2001.

         The Company has also invested in short term debt obligations of an
affiliated bank and holding company. An investment of $250,000 was made in
January, 2001 and repaid in August, 2001, plus interest at the prime rate
amounting to $10,000 for the period January to August, 2001.

17.      Fair Value of Financial Instruments:
         ------------------------------------

         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 and Short-Term Investments:

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

Debt:

         It was not practicable to estimate the fair value of the Company's debt
with its primary lender, its notes payable and its 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.

Accounts Payable:

         The carrying amount approximates fair value because of the short-term
maturity of those debts. The estimated fair values of the Company's financial
instruments are as follows:



                                                 Carrying               Fair
              2002                                Amount                Value
              ----                               --------               -----
                                                                 
Cash and short-term investments                $    94,000             $94,000
Accounts payable                                    27,000              27,000
Debt                                            12,457,000                   -


                                      -28-





                        PGI INCORPORATED AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

18.      (Loss) Per Share:
         -----------------

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



                                                2002                 2001
                                                ----                 ----
                                                           
Numerator:
Net (Loss)                                  $(2,240,000)         $(2,150,000)
Preferred Dividends                            (640,000)            (640,000)
                                            -----------          -----------
(Loss) Available to
  Common Shareholders                       $(2,880,000)         $(2,790,000)
                                            ===========          ===========

Denominator:
BASIC
Weighted average amount of shares
 outstanding                                  5,317,758            5,317,758

DILUTED
Weighted average amount of shares
 outstanding                                  5,317,758            5,317,758
Dilutive effect of assumed conversion
 of Preferred Stock                           -                    -
                                            -----------          -----------
Dilutive common shares                        5,317,758            5,317,758
                                            ===========          ===========

(Loss) per share
   Basic                                        (.54)                (.52)
   Diluted                                      (.54)                (.52)


Item 8.     Changes in and Disagreements with Accountants on Accounting and
-------     ---------------------------------------------------------------
            Financial Disclosure
            --------------------

         Not Applicable.

                                      -29-





                                    PART III
                                    --------

Item 9.     Directors, Executive Officers, Promoters and Control Persons;
-------     -------------------------------------------------------------
            Compliance with Section 16(a) of the Exchange Act
            -------------------------------------------------

         The following information, regarding executive officers and directors
of the Company, is as of March 25, 2003.



                                Position with Company and Business Experience
   Name and Age                 During the Last Five Years
   ------------                 ---------------------------------------------

                             
Laurence A. Schiffer            Director of the Company since April 1987; President and
     (age 63)                   Chief Executive 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; Chairman of Heartland Bank and
                                President of LSHC, the parent company of Heartland Bank since
                                December 1985; Manager of PGIP since 1995;  member of the Real
                                Estate Board of Metropolitan St. Louis and the National
                                Association of Real Estate Boards.

Andrew S. Love, Jr.             Chairman of the Company's Board of Directors since May
     (age 59)                   1987; Secretary 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; Director
                                of Heartland Bank and Chairman of LSHC, the parent company
                                of Heartland Bank since December 1985; 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.


                                      -30-




Item 10.    Executive Compensation
--------    ----------------------

         The Company's Chief Executive Officer is Mr. Laurence A. Schiffer.
Because of the Company's impaired financial condition, it does not compensate
Mr. Schiffer or Mr. Love, the Company's only other executive officer, for the
services they perform for the Company in that capacity. Management services are
provided to the Company by Love Real Estate Company ("LREC") pursuant to that
certain Management Consulting Agreement by and between the Company and LREC
dated March 25, 1987 (the "Management Agreement"). Mr. Schiffer is an employee
of, and receives an annual salary from LREC. Mr. Love receives only a nominal
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 12. "Certain Relationships and Related Party Transactions" for additional
information about the Management Agreement.

         Neither Mr. Schiffer nor Mr. Love received fees from any source
directly attributable to their services as directors of the Company during 2002.

Item 11.    Security Ownership of Certain Beneficial Owners and Management and
--------    ------------------------------------------------------------------
            Related Stockholder Matters
            ---------------------------

         The table below provides certain information as of March 25, 2003
regarding the beneficial ownership of the Common Stock and 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.



                                                                                     Percent of Total
                                                                                   --------------------      Percent of
                                                Common              Preferred       Common    Preferred     Total Voting
         Name                                    Stock                Stock        Stock (1)    Stock         Power (1)
         ----                                    -----                -----        ---------    -----         ---------

                                                                                                 
Estate of Harold Vernon                         998,777(2)(3)              -         18.8%         -            13.7%
Alfred M. Johns                                 437,414(4)           125,000(4)       8.2%       6.3%            7.7%
Love-PGI Partners, L.P.                       2,260,706(5)         1,875,000(5)      42.5%      93.8%           56.5%
Andrew S. Love, Jr.                             385,516(6)         1,875,000(6)      42.5%      93.8%           56.5%
Laurence A. Schiffer                            385,516(7)         1,875,000(7)      42.5%      93.8%           56.5%
All executive officers and directors
   as a group (2 persons)                       385,516(8)         1,875,000(8)      42.5%      93.8%           56.5%


1.       The above table does not include 2,595,356 shares that may be received
         upon conversion of the Company's Convertible Secured Debentures.
2.       The shares of Common Stock owned by 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.
3.       Information obtained from filings made with the Securities and Exchange
         Commission.
4.       Sole voting and investment power over 302,401 shares of Common Stock;
         shared voting and investment power over 10,100 shares of Common Stock
         included in the table which are owned by Mr. John's wife; sole voting
         and investment power over the 125,000 shares of Preferred Stock.

                                      -31-




5.       The controlling general partner of L-PGI is Love Investment Company, a
         Missouri Corporation owned by Mr. Love, Love family members and trusts,
         the Estate of Martha Love Symington and Mr. Schiffer. Messrs. Love and
         Schiffer serve as the executive officers and directors of Love
         Investment Company.
6.       These shares are the same shares owned by L-PGI. Mr. Love is an
         indirect owner of L-PGI. See Footnote 5 above and Item 12. "Certain
         Relationships and Related Transactions" for more information.
7.       These shares are the same shares owned by L-PGI. Mr. Schiffer is an
         indirect owner of L-PGI. See Footnote 5 above and Item 12. "Certain
         Relationships and Related Transactions" for more information.
8.       These shares are the same shares reflected in Footnotes 5, 6 and 7. See
         Footnote 5 above and Item 12. "Certain Relationships and Related
         Transactions" for more information.
9.       Addresses for beneficial owners are as follows:

                                                                          
         Estate of Harold Vernon            Love-PGI Partners, L.P.             Laurence A. Schiffer
         3201 W. Rolling Hills Circle       212 So. Central, Suite 100          212 So. Central, Suite 201
         Fort Lauderdale, FL 33328          St. Louis, MO 63105                 St. Louis, MO 63105

         Alfred M. Johns                    Andrew S. Love, Jr.
         One Woodland Drive                 212 So. Central, Suite 201
         Punta Gorda, FL 33950              St. Louis, MO 63105


Item 12.    Certain Relationships and Related Transactions
--------    ----------------------------------------------

         The Company's primary lender debt of $700,000 is with PGIP and is
secured by substantially all of the Company's real estate. PGIP became the
primary lender in March 1996, with the assignment by First Union, the Company's
former primary bank lender, of all its right, title and interest in and to the
loan documents. PGIP is 100% owned by LSHC. Messrs. Love and Schiffer own
approximately 52% of all of the issued and outstanding voting stock of LSHC and
serve as the directors and officers of LSHC. LSHC along with Messrs. Love and
Schiffer are the managers of PGIP.

         As further security to the primary lender indebtedness with PGIP, a
restricted proceeds escrow was established with the closing of the bulk acreage
sale in May 1998. The escrow agreement permits funds to be paid (i) as requested
by PGI and agreed to by PGIP, or (ii) as deemed necessary and appropriate by
PGIP to protect its interest in the remaining real estate, including its right
to receive principal and interest payments on the indebtedness, or (iii) to PGIP
to pay any other obligations owed to PGIP by the Company. At December 31, 2002
and 2001, the restricted escrow balance was $1,000 and $255,000 respectively.
PGIP utilized $17,000 and $85,000 in 2002 and 2001, respectively, to pay
interest due on the primary lender debt.

                                      -32-





         The Company maintains its administration and accounting offices with
the offices of LREC in St. Louis, Missouri. LREC, a Missouri Corporation, is an
affiliate of L-PGI, and is located at 212 South Central Avenue, Suite 100,
St. Louis, Missouri 63105. A fee of $2,800 per month was paid to LREC in 2002
and 2001. The following is a list of services provided:

         1. Maintain books of original entry;
         2. Prepare quarterly and annual SEC filings;
         3. Coordinate the annual audit;
         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 is 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 to 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.

         Effective as of March 25, 1987, the Company entered into the Management
Agreement with LREC. As a consultant to the Company and in addition to the above
services, LREC provides 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 pays LREC a quarterly consulting fee
of one-tenth of one per cent of the book value of the Company's assets, plus
reasonable out-of-pocket expenses. As of December 31, 2002, the book value of
the Company's assets was approximately $1.5 million. Consulting fees totaling
$6,000 were accrued during 2002 and the Company made payments of $1,000 in
consulting fees in 2002. As of December 31, 2002, a total of $5,000 of unpaid
fees had accrued under the Management Agreement. There were no unpaid fees at
December 31, 2001.

         The Management Agreement will continue in effect until terminated upon
90 days prior written notice by a majority vote of the Company's directors who
have no financial interest in LREC or in any LREC affiliated entity. Currently
all directors have a financial interest in LREC or one of its affiliates.

         Mr. Love receives a nominal salary from LREC. Although Mr. Schiffer
receives a salary from LREC, such salary compensates him for his services to
LREC, which provides consulting services for numerous other entities affiliated
with the Company, and


                                      -33-





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.

         In 1989, the Company sold an aggregate $2,282,451 principal amount of
the Convertible Debentures in a private placement to Love-1989. The general
partner of Love-1989 is Love Investment Company, which is owned by Mr. Love,
Love family members and trusts, the Estate of Martha Love Symington and Mr.
Schiffer. The above purchase by Love-1989 of the Debentures was funded in part
with a loan from L-PGI. Love-1989 has since repaid the debt to L-PGI in full, in
part by transferring a portion of the Debentures held by Love-1989 to L-PGI. In
July 1992, as partial consideration for the Company's conveyance of 350 acres of
property to L-PGI, the Company retired $782,000 in principal amount of the
Debentures held by L-PGI together with $389,000 in accrued interest. The
maturity date on all of the remaining Debentures was extended to July 8, 1997 so
that the Debentures are in default.

         The Debentures were in part collateralized by a second mortgage in
favor of Love-1989 on 650 acres of the Property owned by the Company, which was
sold in May 1998. The 350 acres transferred to L-PGI as described above were
also included in the Property sold. Messrs. Love and Schiffer have caused the
Company to grant a second mortgage on the Retained Acreage to Love-1989 and in
their capacities as control persons of Love-1989, they caused Love-1989 to
release its second mortgage on the 650 acres of the Property sold and they
caused the Company to grant a security interest to Love-1989 behind that held by
PGIP in the restricted proceeds escrow which is under the control of Messrs.
Love and Schiffer since they and a company they control are the managers of
PGIP.

         As of December 31, 2002, Love-1989 held $796,950 in principal amount of
the Debentures with respect to which there was at that date accrued and unpaid
interest in the amount of $3,573,000. In 1990, $703,050 principal amount of the
Debentures was transferred by Love-1989 to one of its (now former) limited
partners. That former limited partner continues to hold such Debentures and as
of December 31, 2002 there was accrued and unpaid interest with respect thereto
in the amount of $3,652,000.

         In 1985, a corporation owned by Alfred M. Johns, the former Chairman of
the Company, and his family made an uncollateralized loan to the Company, which
at December 31, 2002 had an outstanding balance, excluding accrued interest, of
$176,000. Besides being a direct owner of Common and Preferred Stock, Mr. Johns
has no other direct or indirect affiliations with the Company.


                                      -34-





         From time to time, the Company invests in short term debt obligations
with an affiliate of L-PGI, the Company's preferred shareholder, Love Investment
Company. The balance receivable at December 31, 2002 and 2001 was $540,000 and
$100,000 respectively. Interest on the loans was $36,000 and $3,000 for 2002
and 2001.

         The Company also has invested in short term obligations of an
affiliated holding company. An investment of $250,000 was made in January 2001
and repaid in August 2001, plus interest at the prime rate amounting to $10,000
for the period January to August 2001.

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

                                      -35-





                                     PART IV
                                     -------

Item 13.    Exhibits & Reports on Form 8-K
--------    ------------------------------

(a)2.    Exhibits
         Reference is made to the Exhibit Index contained on pages 40 to 44
         herein for a list of exhibits including each management contract,
         compensatory plan or arrangement required to be filed under this Item.

(b)      Reports on Form 8-K.
         None were filed in the fourth quarter of 2002.

Item 14.    Controls and Procedures
-------     -----------------------

         Within 90 days prior to the date of this report, our chief financial
officer carried out an evaluation of the effectiveness of the design and
operation of our "disclosure controls and procedures" (as defined in the
Securities and Exchange Act of 1934 Rules 13a-14(c) and 15(d)-14(c)). Based on
that evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information that is required to be included in our
filings under the Securities Exchange Act of 1934.

         There have not been any significant changes in our internal controls or
in other factors that could significantly affect these controls, including any
corrective actions with regard to significant deficiencies or material
weaknesses, since the date of our evaluation.

                                      -36-





                                   SIGNATURES

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, in the County of
St. Louis, State of Missouri, on this 31st day of March, 2003.

                                             PGI INCORPORATED
                                             (Registrant)

                                             By: /s/ Laurence A. Schiffer
                                                 ------------------------
                                             Laurence A. Schiffer, President

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

Signature                  Title                                Date
---------                  -----                                ----

/s/ Andrew S. Love, Jr.    Chairman of the Board                March 31, 2003
-----------------------    Secretary
Andrew S. Love, Jr.

/s/ Laurence A. Schiffer   Vice Chairman of the                 March 31, 2003
------------------------   Board, President, Principal
Laurence A. Schiffer       Executive Officer, Principal
                           Financial Officer and
                           Principal Accounting Officer


                                      -37-





                                  CERTIFICATION
                                  -------------

I, Laurence A. Schiffer, certify that;

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

2.       Based on my knowledge, this annual 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 annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual 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 annual report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

         a) designed such disclosure controls and procedures 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 annual report is
         being prepared.
         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date
         of this annual report (the "Evaluation Date"); and
         c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and
         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         annual report whether there were significant changes in internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.


/s/ Laurence A. Schiffer       Laurence A. Schiffer            March 31, 2003
-------------------------      Principal Executive Officer


                                      -38-





                                  CERTIFICATION
                                  -------------

I, Laurence A. Schiffer, certify that;

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

2.       Based on my knowledge, this annual 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 annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual 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 annual report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

         a) designed such disclosure controls and procedures 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 annual report is
         being prepared.
         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date
         of this annual report (the "Evaluation Date"); and
         c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and
         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         annual report whether there were significant changes in internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.


/s/ Laurence A. Schiffer       Laurence A. Schiffer             March 31, 2003
-------------------------      Principal Financial Officer

                                      -39-





EXHIBIT INDEX

2.       Inapplicable.

3.1      Articles of Incorporation (filed as Exhibit 3.1 to Registrant's Form
         10-K Annual Report for the year ended December 31, 1980 and
         incorporated herein by reference).

3.2      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") and
         incorporated herein by reference).

3.3      Bylaws of Registrant, as amended September 1987 (filed as Exhibit 3.3
         to Registrant's original Form 10-K Annual Report for the year ended
         December 31, 1987 ("Original 1987 Form 10-K") dated as of March 29,
         1987 and incorporated herein by reference).

3.4      Amendments to the Articles of Incorporation effective March 13, 1990
         and July 27, 1990, dated as of November 13, 1990 (filed as Exhibit 19
         to the September 30, 1990 Form 10-Q and incorporated herein by
         reference).

3.5      Amendments to the Bylaws of the Registrant by the Board of Directors
         of PGI Incorporated by the Unanimous Written Consent, dated as of
         March 17, 1995 (filed as Exhibit 3.5 to the December 31, 1995
         Form 10KSB and incorporated herein by reference).

3.6      Articles of Incorporation of PGI Incorporated as amended through
         December 22, 1997 (filed as Exhibit 3.1 to Registrant's June 30, 1998
         Form 10-QSB and incorporated herein by reference).

3.7      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).

4.1      Extension and Forbearance Agreement among PGI Incorporated, Punta Gorda
         Developers, Inc., Burnt Store Marina, Inc., and Gulf Coast Credit
         Corporation and BancFlorida (formerly Naples Federal Savings and Loan
         Association), dated as of March 25, 1987 (filed as Exhibit 4.4 to the
         1986 Form 10-K and incorporated herein by reference).


                                      -40-





4.2      Seventh Mortgage and Loan Modification Agreement among PGI
         Incorporated, Punta Gorda Developers, Inc., Burnt Store Marina, Inc.,
         and Gulf Coast Credit Corporation and BancFlorida, dated as of
         March 25, 1987 (filed as Exhibit 4.5 to the 1986 Form 10-K and
         incorporated herein by reference).

4.3      Eighth Mortgage and Loan modification Agreement among PGI Incorporated,
         Punta Gorda Developers, Inc., Burnt Store Marina, Inc., and Gulf Coast
         Credit Corporation and BancFlorida, dated as of March 25, 1987
         (filed as Exhibit 4.6 to the 1986 Form 10-K and incorporated herein
         by reference).

4.4      Restated Loan and Security Agreement among PGI Incorporated, Punta
         Gorda Developers, Inc., Burnt Store Marina, Inc., and Gulf Coast Credit
         Corporation and BancFlorida, as well as Restated Consolidating
         Substituted Renewal Note and Future Advance Mortgage Note related
         thereto, dated as of March 25, 1987 (filed as Exhibit 4.7 to the 1986
         Form 10-K and incorporated herein by reference).

4.5      Forbearance Agreement among PGI Incorporated, Punta Gorda Developers,
         Inc., Burnt Store Marina, Inc., and Gulf Coast Credit Corporation and
         BancFlorida (Restated Loan Agreement No.1), dated as of October 19,
         1985 (filed as Exhibit 4.1 to the Registrant's Form 10-Q Quarterly
         Report for the quarter ended September 30, 1985 and incorporated herein
         by reference).

4.6      Amendment to Restated Loan Agreement No. 1 (Receivables Loan), as well
         as Restated Consolidating Substituted Renewal Note relating thereto,
         dated as of March 25, 1987 (filed as Exhibit 4.9 to the 1986 Form 10-K
         and incorporated herein by reference).

4.7      Extension, Forbearance and Modification Agreement between PGI
         Incorporated, Punta Gorda Developers, Inc., Burnt Store Marina, Inc.,
         and Gulf Coast Credit Corporation, and BancFlorida, dated as of May 20,
         1988 (filed as Exhibit 4.1 to the Registrant's Form 10-Q Quarterly
         Report for the quarter ended June 30, 1988 and incorporated herein
         by reference).

4.8      Ninth Mortgage and Loan Modification Agreement between PGI
         Incorporated, Punta Gorda Developers, Inc., Burnt Store Marina, Inc.,
         and Gulf Coast Credit Corporation, and BancFlorida, dated as of
         May 20, 1988 (filed as Exhibit 4.2 to Registrant's Form 10-Q Quarterly
         Report for the quarter ended June 30, 1988 and incorporated herein by
         reference).

4.9      Purchase Agreement among Finova Financial Services, PGI Incorporated
         and Punta Gorda Developers, Inc., as well as certain Exhibits and the
         Mortgage related thereto, dated March 15, 1988 (filed as Exhibit 1 to
         Registrant's Form 8-K dated as of March 28, 1988 and incorporated
         herein by reference).


                                      -41-





4.10     Tenth Mortgage and Loan Modification Agreement between PGI
         Incorporated, Punta Gorda Developers, Inc., as well as certain Exhibits
         and the Mortgage related thereto, dated May 30, 1989 (filed as Exhibit
         1 to Registrant's Form 8-K dated as of June 8, 1989 and incorporated
         herein by reference).

4.11     Eleventh Mortgage and Loan Modification among PGI Incorporated
         (formerly Punta Gorda Isles, Inc.), Sugarmill Woods, Inc. (formerly
         Punta Gorda Developers, Inc.), Burnt Store Marina, Inc. and Gulf Coast
         Credit Corporation and BancFlorida (formerly Naples Federal Savings and
         Loan Association), dated as of June 1, 1990 (filed as Exhibit 4.2 to
         Registrant's Form 10-Q Quarterly Report for the quarter ended June 30,
         1990 and incorporated herein by reference).

4.12     Loan Forbearance Agreement among PGI Incorporated (formerly Punta
         Gorda Isles, Inc.), Sugarmill Woods, Inc, (formerly Punta Gorda
         Developers, Inc.), Burnt Store Marina, Inc. and Gulf Coast Credit
         Corporation and BancFlorida (formerly Naples Federal Savings and Loan
         Association), dated as of October 17, 1991 (filed as Exhibit 4.12 to
         Registrant's Form 10-K dated March 30, 1994 and incorporated herein by
         reference).

4.13     Twelfth mortgage and loan modification among PGI Incorporated,
         Sugarmill Woods, Inc., Burnt Store Marina, Inc. and Gulf Coast Credit
         Corporation and BancFlorida, dated as of July 8, 1992 (filed as Exhibit
         4.1 to Registrant's Form 8-K dated as of July 24, 1992, and
         incorporated herein by reference).

4.14     Thirteenth mortgage and loan modification agreement among PGI
         Incorporated, Sugarmill Woods, Inc., Burnt Store Marina, Inc., Gulf
         Coast Credit Corporation and First Union, dated as of May 13, 1994
         (filed as Exhibit 4.1 to Registrant's Form 8-K dated May 27, 1994 and
         incorporated herein by reference).

4.15     Forbearance Agreement dated as of October 12, 1995 by First Union
         National Bank of Florida, PGI Incorporated, Sugarmill Woods, Inc.,
         Burnt Store Marina, Inc., Gulf Coast Credit Corporation, Southern
         Woods, Incorporated, Punta Gorda Isles, Inc., Deep Creek Utilities,
         Inc., Burnt Store Utilities, Inc., and Sugarmill Woods Sales, Inc.
         (filed as Exhibit 4(i) to Registrant's Form 8-K on November 1, 1995 and
         incorporated herein by reference).

4.16     Note and Loan Document Purchase Agreement dated as of October 12, 1995
         by First Union National Bank of Florida, PGIP, L.L.C., PGI
         Incorporated, Sugarmill Woods, Inc., Burnt Store Marina, Inc., and
         Gulf Coast Credit Corporation (filed as Exhibit 4 (ii) to Registrant's
         Form 8-K on November 1, 1995 and incorporated herein by reference).

                                      -42-





4.17     Note Purchase and Loan Transaction dated as of March 28, 1996, by
         First Union National Bank of Florida, PGIP, LLC, PGI Incorporated,
         Sugarmill Woods, Inc., Burnt Store Marina, Inc. and Gulf Coast Credit
         Corporation (filed as Exhibit 4.17 to Registrant's Form 10-KSB/A dated
         August 27, 1997, and incorporated herein by reference).

9.0      Inapplicable.

10.      Inapplicable.

10.1     PGI Incorporated Restated 1981 Incentive Stock Option Plan, as amended
         (filed as Exhibit 10.1 to the Original 1987 Form 10-K and incorporated
         herein by reference).

10.2     PGI Incorporated 1987 Non-Qualified Stock Option and Stock Appreciation
         Rights Plan (filed as Exhibit 10.2 to the Original 1987 Form 10-K and
         incorporated herein by reference).

10.3     Preferred Stock Purchase Agreement by and between PGI Incorporated and
         Love Development and Investment Company, dated as of February 16, 1987
         (filed as Exhibit (i) to the Registrant's Form 8-K Current Report dated
         February 25, 1987 and incorporated herein by reference).

10.4     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 and incorporated herein by reference).

10.5     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 and incorporated herein by reference).

10.6     Option Agreement For Sale and Purchase dated January 31, 1997, between
         Sugarmill Woods, Inc., Love-PGI Partners, L.P., and The Nature
         Conservancy (filed as Exhibit 10.6 to Registrant's Form 10-KSB/A dated
         August 27, 1997 and incorporated herein by reference).

10.7     First Amendment to Option Agreement for Sale and Purchase dated August
         25, 1997 between Sugarmill Woods, Inc., Love-PGI Partners, L.P., and
         The Nature Conservancy (filed as part of Appendix B to Registrant's
         Proxy Statement dated December 8, 1997 and incorporated herein by
         reference).


                                      -43-




10.8     Second Amendment to Option Agreement for Sale and Purchase dated
         September 29, 1997 between Sugarmill Woods, Inc., Love-PGI Partners,
         L.P., and The Nature Conservancy (filed as part of Appendix B to
         Registrant's Proxy Statement dated December 8, 1997 and incorporated
         herein by reference).

11.      See Note 18 to the consolidated financial statements

13.      Inapplicable.

16.      Inapplicable.

18.      Inapplicable.

21.      Subsidiaries of the Registrant, filed herein.

22.      Inapplicable.

23.      Consent of Independent Certified Public Accountants, filed herein.

24.      Inapplicable.

99.1     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.

99.2     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.

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