pgai_10q.htm


U.S SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10 – Q
 
(Mark One)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2013
 
o
TRANSITION REPORT UNDER 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 incorporation)    (I.R.S. Employer Identification No.)
 
212 SOUTH CENTRAL, SUITE 100, ST. LOUIS, MISSOURI 63105
(Address of principal executive offices)

(314) 512-8650
(Registrant’s telephone number, including area code)
 
N/A
(Former Name, Former Address and Former Fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes  þ No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 
Large accelerated filer o Accelerated filer o
Non-accelerated filer o Smaller reporting company  þ
(Do not check if a smaller reporting company)    
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

State the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: As of May 14, 2013, there were 5,317,758 shares of the registrant’s common stock, $.10 par value per share, outstanding.
 


 
 

 
PGI INCORPORATED AND SUBSIDIARIES
 
Form 10 – Q
 
For the Quarter Ended March 31, 2013

Table of Contents
 
       
Form 10 - Q
Page No.
 
PART I      
         
    Condensed Consolidated Statements of Financial Position March 31, 2013 (Unaudited) and December 31, 2012     3  
        4  
        5  
        6  
      11  
      14  
      14  
             
PART II        
             
      15  
  Item1A. Risk Factors     15  
      15  
      15  
      15  
      15  
      15  
             
SIGNATURE     16  
             
EXHIBIT INDEX     17  

 
2

 
 
PART I  FINANCIAL INFORMATION
 
ITEM 1.  FINANCIAL STATEMENTS
 
PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
($ in thousands, except share and per share data)
(Unaudited)
 
   
March 31,
   
December 31,
 
   
2013
   
2012
 
   
(Unaudited)
       
ASSETS
           
Cash
  $ 1     $ 1  
Restricted cash
    5       5  
Receivables-related party
    512       543  
Land and improvement inventories
    639       639  
Other assets
    186       187  
    $ 1,343     $ 1,375  
                 
LIABILITIES
               
Accounts payable and accrued expenses
  $ 215     $ 211  
Accrued real estate taxes
    2       8  
Accrued interest:
               
Primary lender-related party
    334       324  
Subordinated convertible debentures
    20,092       19,792  
Convertible debentures-related party
    36,897       35,598  
Other
    2,912       2,896  
Credit agreements:
               
      Primary lender-related party
    500       500  
      Notes payable
    1,198       1,198  
      Subordinated convertible debentures payable
    9,059       9,059  
      Convertible debentures payable-related party
    1,500       1,500  
      72,709       71,086  
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)
    2,000       2,000  
Common stock, par value $.10 per share;
               
authorized  25,000,000 shares; 5,317,758
               
shares issued and outstanding
    532       532  
Paid-in capital
    13,498       13,498  
Accumulated deficit     (87,396 )     (85,741 )
      (71,366 )     (69,711 )
    $ 1,343     $ 1,375  
 
See accompanying notes to Condensed Consolidated Financial Statements.
 
 
3

 
PART I  FINANCIAL INFORMATION (CONTINUED)
 
PGI INCORPORATED AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share data)
(Unaudited)
 
   
Three Months Ended
 
   
March 31,
   
March 31,
 
   
2013
   
2012
 
REVENUES
           
Interest income-related party
    4       8  
      4       8  
                 
COSTS AND EXPENSES
               
Interest
    316       309  
Interest-related party
    1,308       1,142  
Taxes and assessments
    2       2  
Consulting and accounting-
               
related party
    10       10  
Legal and professional
    4       4  
General and administrative
    19       18  
      1,659       1,485  
NET LOSS
  $ (1,655 )   $ (1,477 )
 
               
NET LOSS PER SHARE (*)
               
AVAILABLE TO COMMON
               
STOCKHOLDERS-Basic and diluted
  $ (.34 )   $ (.31 )
 
* Considers the effect of cumulative preferred dividends in arrears for the three months ended March 31, 2013 and 2012.
 
See accompanying notes to Condensed Consolidated Financial Statements.
 

PART I  FINANCIAL INFORMATION (CONTINUED)
 
PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(Unaudited)
 
   
Three Months Ended
 
   
March 31,
   
March 31,
 
   
2013
   
2012
 
             
Net cash used in operating activities
  $ (30 )   $ (26 )
                 
Cash flows from investing activities:
               
Proceeds from notes receivable-related party
    30       26  
Net cash provided by investing activities
    30       26  
                 
Net change in cash
    -       -  
                 
Cash at beginning of period
    1       1  
                 
Cash at end of period
  $ 1     $ 1  
 
See accompanying notes to Condensed Consolidated Financial Statements.
 
 
PGI INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

(1)
Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements of PGI Incorporated and its subsidiaries (the “Company”) have been prepared in accordance with the instructions to Form 10 - Q and therefore do not include all disclosures necessary for fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The Company's independent registered public accounting firm included an explanatory paragraph regarding the Company's ability to continue as a going concern in their opinion on the Company's consolidated financial statements for the year ended December 31, 2012.

Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K annual report for 2012 filed with the Securities and Exchange Commission.

The condensed consolidated balance sheet as of December 31, 2012 has been derived from the audited consolidated balance sheet as of that date.

The Company remains in default under the indentures governing its unsecured subordinated debentures and collateralized convertible debentures and in default of its primary debt obligations. (See Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes 7, 8, and 9 to the Company's consolidated financial statements for the year ended December 31, 2012, as contained in the Company's Annual Report on Form 10 - K).

All adjustments (consisting of only normal recurring accruals) necessary for fair presentation of financial position, results of operations and cash flows have been made. The results for the three months ended March 31, 2013 are not necessarily indicative of operations to be expected for the fiscal year ending December 31, 2013 or any other interim period.

 (2)
Per Share Data
 
Basic per share amounts are computed by dividing net income (loss), after considering current period dividends on the Company's preferred stock, by the average number of common shares and common stock equivalents outstanding. The average number of common shares outstanding for the three months ended March 31, 2013 and 2012 was 5,317,758.

 
6


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

 
Diluted per share amounts are computed by dividing net income (loss) by the average number of common shares outstanding, after adjusting for the estimated effect of the assumed conversion of all cumulative convertible preferred stock and collateralized convertible debentures into shares of common stock. For the three months ended March 31, 2013 and 2012, the assumed conversion of all cumulative convertible preferred stock and collateralized convertible debentures would have been anti-dilutive.
 
The following is a summary of the calculations used in computing basic and diluted (loss) per share for the three months ended March 31, 2013 and 2012.
 
   
Three Months Ended
 
   
March 31,
2013
   
March 31,
2012
 
Net Loss
  $ (1,655,000 )   $ (1,477,000 )
Preferred Dividends
    (160,000 )     (160,000 )
Loss Available to Common Shareholders
  $ (1,815,000 )   $ (1,637,000 )
Weighted Average Number Of Common Shares Outstanding
    5,317,758       5,317,758  
Basic and Diluted Loss Per Share
  $ (.34 )   $ (.31 )

(3) 
Statement of Cash Flows
 
The Financial Accounting Standards Board Accounting Standards Codification Topic No. 230, “Statement of Cash Flows”, requires a statement of cash flows as part of a full set of financial statements. For quarterly reporting purposes, the Company has elected to condense the reporting of its net cash flows. There were no payments of interest for the three-month periods ended March 31, 2013 and March 31, 2012.
 
(4) 
Restricted Cash
 
Restricted cash includes restricted proceeds held by the primary lender as collateral for debt repayment.

 
7


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

(5)  
Receivables
Net receivables consisted of:
   
March 31,
2013
   
December 31,
2012
 
    ($ in thousands)  
       
Notes receivable – related party
  $ 512     $ 542  
Interest receivable – related party
    -       1  
    $ 512     $ 543  
 
(6)
Land and Improvements
Land and improvement inventories consisted of:
   
March 31,
   
December 31,
 
   
2013
   
2012
 
    ($ in thousands)  
             
Unimproved land
  $ 625     $ 625  
Fully improved land
    14       14  
    $ 639     $ 639  
 
(7)
Other Assets
Other assets consisted of:
   
March 31,
   
December 31,
 
   
2013
   
2012
 
    ($ in thousands)  
             
Deposit with Trustee of 6-1/2% debentures
  $ 184     $ 184  
Prepaid expenses
    1       2  
Deferred charges
    1       1  
    $ 186     $ 187  
 
 
8

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

(8)
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of:
   
March 31,
2013
   
December
31, 2012
 
   
($ in thousands)
 
             
Accounts payable
  $ 4     $ -  
Accrued audit & professional
    34       36  
Accrued consulting fees-related party
    1       1  
Environmental remediation obligations
    70       70  
Accrued debenture fees
    105       103  
Accrued miscellaneous
    1       1  
    $ 215     $ 211  
Accrued real estate taxes consisted of:
               
Current real estate taxes
  $ 2     $ 8  
 
(9)
Primary Lender Credit Agreements, Notes Payable, Subordinated and Convertible Debentures Payable
Credit agreements with the Company’s primary lender and notes payable consisted of the following:
   
March 31,
   
December 31,
 
   
2013
   
2012
 
   
($ in thousands)
 
       
Credit agreements – primary lender- related party:
           
   balance is past due, bearing interest
           
   at prime plus 5%
  $ 500     $ 500  
                 
Notes payable - $1,176,000
               
   bearing interest at prime plus 2%,
               
   the remainder non-interest bearing,
               
   all past due
    1,198       1,198  
      1,698       1,698  
 
               
Subordinated debentures payable:
               
                 
   At 6-1/2% interest; due June 1, 1991
    1,034       1,034  
   At 6% interest; due May 1, 1992
    8,025       8,025  
      9,059       9,059  
Collateralized convertible debentures payable related party:
               
                 
At 14% interest; due July 8, 1997,
               
   convertible into shares of common stock
    1,500       1,500  
   at $1.72 per share
  $ 12,257     $ 12,257  

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

(10)
Income Taxes
At December 31, 2012, the Company had an operating loss carryforward of approximately $47,445,000 available to reduce future taxable income. These operating losses expire at various dates through 2032.
The following summarizes the temporary differences of the Company at March 31, 2013 and December 31, 2012 at the current statutory rate:
 
 
 
March 31,
2013
   
December 31,
2012
 
   
($ in thousands)
 
Deferred tax asset:
           
Net operating loss carry forward
  $ 18,658     $ 18,029  
Adjustments to reduce land to net realizable value
    12       12  
Expenses capitalized under IRC 263(a)
    56       56  
Environmental liability
    27       27  
Valuation allowance     (18,581 )     (17,952 )
      172       172  
                 
Deferred tax liability:
               
Basis difference of land and improvement inventories
    172       172  
Net deferred tax asset
  $ -     $ -  
 
(11) 
Fair Value of Financial Instruments
 
The carrying amount of the Company’s financial instruments, other than debt, approximates fair value at March 31, 2013 and December 31, 2012 because of the short maturity of those instruments. 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.

 
10

 
PGI INCORPORATED AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Preliminary Note

The Company’s most valuable remaining asset is a parcel of 366 acres located in Hernando County, Florida. As of March 31, 2013, the Company also owned 6 single-family lots, located in Citrus County, Florida. In addition, the Company owns some minor parcels of real estate in Charlotte County and Citrus County, Florida, which totals approximately 60 acres, but these have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale.

The 366-acre parcel in Hernando County is difficult to value because of uncertainty related to the possible extension of the Suncoast Expressway, which terminates on the south side of Route 98 opposite this property. Planning continues for the proposed northward continuation of the Suncoast Expressway, and based on an endorsement in 2007 by the Citrus County Commission to re-adopt a project that was originally approved in 1998, the route that is presently believed to be the most probable is through the middle of this parcel of property. However, until and unless the uncertainty regarding the future expansion of the Suncoast Expressway and the related prospect of an eminent domain taking of a significant portion of the parcel is resolved, planning with respect to this property is difficult.

Results of Operations

Revenues for the first three months of 2013 decreased by $4,000 to $4,000 from $8,000 for the comparable 2012 period primarily as a result of a decrease in interest income due to a lower balance on the short-term note receivable with Love Investment Company (“LIC”), an affiliate of L-PGI, the Company’s primary preferred stock shareholder. In addition, the interest rate under the terms of such note receivable dropped to 3.25% during the first three months of 2013 as compared to 5% during the first three months of 2012. Expenses for the three month period ended March 31, 2013 increased by $174,000 when compared to the same period in 2012 resulting from an increase in interest expense of $173,000 due to interest accruing on higher past due balances under the various credit agreements, notes payable and debentures which increased over the same period in 2012 for accrued but unpaid interest. As a result, a net loss of $1,655,000 was incurred for the first three months of 2013 compared to a net loss of $1,477,000 for the first three months of 2012. After consideration of cumulative preferred dividends in arrears, totaling $160,000 for each of the three months ended March 31, 2013 and 2012, with respect to the Class A Preferred Stock, a net loss per share of $(.34) and $(.31) was reported for the three month periods ended March 31, 2013 and 2012, respectively. The total cumulative preferred dividends in arrears with respect to the Class A Preferred Stock through March 31, 2013 is $11,475,000.

Interest expense during the three month period ended March 31, 2013 increased by $173,000 when compared to the same period in 2012. This increase is a result of interest accruing on higher past due balances under the various credit agreements, notes payable and debentures which has increased at various intervals during the year for accrued but unpaid interest.
 
 
11

 
 
PGI INCORPORATED AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 
As of March 31, 2013, the Company remained in default of its primary lender indebtedness with PGIP, LLC (“PGIP”) of $500,000, an entity related to L-PGI, as well as under its subordinated and convertible debentures and its notes payable. PGIP holds restricted funds of the Company pursuant to an escrow agreement whereby funds may be disbursed (i) as requested by the Company and agreed to by PGIP, (ii) as deemed necessary and appropriate by PGIP, to protect PGIP's interest in the Retained Acreage (as hereinafter defined), including PGIP's right to receive principal and interest under the note agreement securing the remaining indebtedness, or (iii) to PGIP to pay any other obligations owed to PGIP by the Company. The restricted escrow funds held by PGIP were $5,000 at March 31, 2013 and December 31, 2012. The Company did not utilize any of the restricted escrow funds during the first quarter of 2013 or 2012.

The primary parcel of real estate owned by the Company, totaling 366 acres and located in Hernando County, Florida (the "Retained Acreage"), remains subject to the primary lender indebtedness.

Cash Flow Analysis
 
During the three month period ended March 31, 2013, the Company’s net cash used in operating activities was $30,000 compared to $26,000 for the comparable 2012 period. Net cash provided from investing activities during the three months ended March 31, 2013 and March 31, 2012 consisted of $30,000 and $26,000, respectively, in note receivable proceeds received from LIC. The Company receives proceeds from its notes receivable from LIC as needed to fund operating activities.

Analysis of Financial Condition

Total assets decreased by $32,000 at March 31, 2013 compared to total assets at December 31, 2012, reflecting the following changes:

   
March 31,
2013
   
December 31,
2012
   
Increase
(Decrease)
 
     ($ in thousands)  
       
Cash and cash equivalents
  $ 1     $ 1     $ -  
Restricted cash
    5       5       -  
Receivables-related party
    512       543       (31 )
Land and improvement inventories
    639       639       -  
Other assets
    186       187       (1 )
    $ 1,343     $ 1,375     $ (32 )
 
During the three month period ended March 31, 2013, the amount of receivables decreased by $31,000 due to the Company’s receipt of principal and accrued interest payments from LIC , a related party, under the note receivable from LIC,  and the amount of the other assets decreased by $1,000 due to the utilization of prepaid expenses for insurance.
 
 
12

 
PGI INCORPORATED AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 
Liabilities were approximately $72.7 million at March 31, 2013 compared to approximately $71.1 million at December 31, 2012, reflecting the following changes:

   
March 31,
2013
   
December 31,
2012
   
Increase
(Decrease)
 
      ($ in thousands)  
                   
Accounts payable & accrued expenses
  $ 215     $ 211     $ 4  
Accrued real estate taxes
    2       8       (6 )
Accrued interest
    60,235       58,610       1,625  
Credit agreements – primary lender-
                       
 related party
    500       500       -  
Notes payable
    1,198       1,198       -  
Subordinated convertible
                       
 debentures payable
    9,059       9,059       -  
Convertible debentures payable-related
                       
 party
    1,500       1,500       -  
    $ 72,709     $ 71,086     $ 1,623  

During the three month period ended March 31, 2013 the amount of accounts payable and accrued expenses increased by $4,000 primarily due to the accrual of $2,000 in annual administration fees relating to the 6% subordinated convertible debentures and $1,000 in expenses relating to a cell tower lease on a parcel located in Citrus County, Florida which is not expected to produce income until 2014. The lease was executed as of May 1, 2013 and rent of $1,800 per month will begin to be paid by the lessee to the Company upon the earlier of issuance of a building permit for such tower or 18 months after May 1, 2013. The lease term is 10 years with six successive five year renewal periods. There have been no payments of the cumulative debenture administration fees in 2013 or 2012. Accrued real estate taxes decreased by $6,000 during the three month period ended March 31, 2013 due to the payment of previously accrued real estate taxes.

Accrued interest increased during the three month period ended March 31, 2013 by $1.625 million due to the amount of interest expense for such period. During the three month periods ended March 31, 2013 and March 31, 2012, the Company made no interest payments on its various credit agreements, notes payable and debentures.

The Company remains totally dependent upon the sale of parcels of its various properties to fund its operations and with respect to its ability to make any future debt service payments or any future preferred dividend payments. The Company also receives principal repayment and interest proceeds from its note receivable due from LIC, a related party, on an as needed basis to fund its operating activities.

The Company remains in default on the entire principal amount plus interest (including certain sinking fund and interest payments with respect to its subordinated debentures) of its subordinated and convertible debentures and notes payable, as well as its primary lender indebtedness with PGIP. The principal and accrued interest amounts due are as indicated in the following table:
 
     March 31, 2013  
   
Principal
   
 Accrued
 
   
Amount Due
   
Interest
 
     ($ in thousands)  
Subordinated convertible debentures:
           
At 6 ½%, due June 1, 1991
  $ 1,034     $ 1,631  
At 6%, due May 1, 1992
    8,025       18,461  
    $ 9,059     $ 20,092  
 
 
13

 
PGI INCORPORATED AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Collateralized convertible debentures:
           
At 14%, due July 8, 1997
  $ 1,500     $ 36,897  
                 
Notes Payable:
               
At prime plus 2%
  $ 1,176     $ 2,912  
Non-interest bearing
    22       -  
    $ 1,198     $ 2,912  
                 
Primary Lender-related party:
  $ 500     $ 334  
 
The Company does not have sufficient funds available to satisfy either principal or interest obligations on the above indebtedness, debentures and notes payable or any arrearage in preferred dividends.

The Company’s independent registered public accounting firm included an explanatory paragraph regarding the Company’s ability to continue as a going concern in their opinion on the Company’s consolidated financial statements for the year ended December 31, 2012.

 Forward Looking Statements
 
The discussion set forth in this Item 2, as well as other portions of this Form 10-Q, may contain forward-looking statements. Such statements are based upon the information currently available to management of the Company and management’s perception thereof as of the date of the Form 10-Q. When used in this Form 10-Q, words such as “anticipates,” “estimates,” “believes,” “expects,” and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties. Actual results of the Company’s operations could materially differ from those forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to: changes in the real estate market in Florida and the counties in which the Company owns any property; institution of legal action by the bondholders for collection of any amounts due under the subordinated or convertible debentures (notwithstanding the Company’s belief that at least a portion of such actions might be barred under applicable statute of limitations); continued failure by governmental authorities to make a decision with respect to the Suncoast Expressway as described under Item 2; changes in management strategy; and other factors set forth in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time.
 
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Not applicable.

ITEM 4. CONTROLS AND PROCEDURES
 
The Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures under the supervision and with the participation of its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based on this evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2013. There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
 
14

 
PGI INCORPORATED AND SUBSIDIARIES
 
PART II OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
 
The Company, to its knowledge, currently is not a party to any legal proceedings.

ITEM 1A.  RISK FACTORS
 
Not applicable.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
 
See discussion in Item 2 of Part I with respect to defaults under the Company's subordinated convertible debentures, collateralized convertible debentures and other indebtedness and with respect to cumulative preferred dividends in arrears, which discussions are incorporated herein by this reference.

ITEM 4.  MINE SAFETY DISCLOSURES
 
Not applicable.

ITEM 5.  OTHER INFORMATION
 
Not applicable.

ITEM 6.  EXHIBITS
 
Reference is made to the Exhibit Index hereof for a list of exhibits filed or furnished under this Item.
 
 
PGI INCORPORATED AND SUBSIDIARIES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
PGI INCORPORATED
(Registrant)
       
Date: May 14, 2013     
/s/ Laurence A. Schiffer
 
   
Laurence A. Schiffer
 
   
President
 
   
(Duly Authorized Officer, Principal
Executive Officer and Principal
Financial Officer)
 
 
 
16

 
PGI INCORPORATED AND SUBSIDIARIES
 
   
2.
Inapplicable.
   
3.(i)
Inapplicable.
   
3.(ii)
Inapplicable.
   
4.
Inapplicable.
   
10.
Inapplicable.
   
11.
Statement re: Computation of Per Share Earnings (Set forth in Note 2 of the Notes to Condensed Consolidated Financial Statements (Unaudited) herein).
   
15.
Inapplicable.
   
18.
Inapplicable.
   
19.
Inapplicable.
   
22.
Inapplicable.
   
23.
Inapplicable.
   
24.
Inapplicable.
   
Principal Executive Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
   
Principal Financial Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
   
Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350.
   
Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350.
   
95.
Inapplicable
   
99.
Inapplicable
   
100.
Inapplicable
   
101.
Instance Document, Schema Document, Calculation Linkbase Document, Labels Linkbase Document, Presentation Linkbase Document and Definition Linkbase Document.*
 
 
·
Furnished with this report.
 
 
17