PGI INCORPORATED LIQUIDITY AND CAPITAL RESOURCES
The liabilities of the Company exceed the reported value of its assets.
Management's efforts and activities have been, and continue to be, to sell
assets of the Company to repay its indebtedness and to pay the ordinary
administrative expenditures in keeping an inactive company in existence. The
aggregate remaining land inventory is less than 70 acres, consisting of multiple
parcels located in two
In management's judgment, the assets will be insufficient to satisfy much, if any, of the outstanding indebtedness of the Company. Consequently, there is substantial doubt about the Company's ability to continue as a "going concern," as that term is used for generally accepted accounting purposes. The asset carrying values shown in the financial statements, are judged to be reasonable estimates of the value, when viewed in the context of the entirety of the financial statements.
In early 2019, the Board of Directors of PGI concluded that PGI met and
continues to meet all of the conditions under which a registrant may be deemed
an "Inactive Entity" as that term is defined or contemplated in Rule 3-11 of
Regulation S-X and as the term "Inactive Registrant" is further contemplated in
the
As an Inactive Registrant, PGI currently intends to continue to timely file
Annual Reports on Forms 10-K with the
7
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
PGI meets all of the conditions in Rule 3-11 of Regulation S-X for an "Inactive Registrant" which are:
(a)
Gross receipts not in excess of$100,000 ; (b) Not purchasing or selling any of its own stock or granted options therefor; (c) Expenditures for all purposes not in excess of$100,000 ; (d) No material change in the business has occurred during the fiscal year; (e) No securities exchange or governmental authority having jurisdiction over the entity requires the entity to furnish audited financial statements.
As the Company reviews its circumstances, it has met the conditions as an Inactive Registrant since 2017.
The Company, formerly a
As an Inactive Registrant, PGI currently intends to continue to provide
comprehensive updates through its
The Company's financial statement indebtedness includes the: (i) 6.5%
subordinated convertible debentures, which matured in June, 1991, with a
remaining face amount of
With respect to the 6.5% subordinated convertible debentures, the Trustee
provided notice of final distribution to the holders of such debentures on
8
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
During the year ended
As of
The 6.5% subordinated convertible debenture balances for the years ended
2019 2018
($ in thousands)
Original face value $1,034 $1,034 Outstanding debenture principal balance 138 138 Face value of debentures surrendered
- 22
Face value of debentures escheated - 287
Accrued and unpaid interest balance 279 270
Debenture reserve account balance 13 13
Debenture reserve funds utilized
in payment of final distribution - 2
Debenture reserve funds utilized
in escheatment to states of debenture holders - 26 Forgiveness of debt - 281 Forgiveness of interest - 594
If and when such remaining debentures are surrendered to the Trustee, or escheated to the states of residence of the respective debenture holders, the applicable portion of such principal and accrued interest will similarly be recorded as debt and accrued interest forgiveness. As the Company has consistently stated in prior filings, the Company believes that any potential claims by the respective debenture holders on such 6.5% subordinated convertible debentures would be barred under the applicable statutes of limitations.
9Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
In addition to the convertible subordinated debentures noted above, the
Company's financial statement indebtedness includes its 6.0% subordinated
convertible debentures which matured in May, 1992, with a remaining face amount
of
The cumulative amount due for the 6.5% and 6% subordinated convertible
debentures as of
Principal Unpaid
Amount Due Interest
($ in thousands)
6.5% Subordinated debentures due
$8,163 $27,070
Both issues of subordinated convertible debentures have been in payment default
for over twenty-five years. It is unclear whether any action on behalf of the
bondholders is presently likely, given the negative net worth of the Company and
continuing passage of time. Further, the Company believes that if claims were to
be asserted with respect to the 6.5% subordinated convertible debentures which
matured on
If such claims are barred, the Company will likely recognize income in like
amount for income tax purposes, without the receipt of any cash. Management
estimates that the potential income tax liability may be largely averted by the
insolvency exception of the tax laws and the utilization of the Company's tax
loss carryforwards, which as of
Even if claims by the subordinated convertible debenture holders are barred in
full and there is no cash tax consequence to the Company as a result of the
utilization of the tax loss carry forwards, the Company would nonetheless have a
substantial Stockholders' Deficiency. As of
10Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS Revenues
Revenues for the year ended
Costs and Expenses
Costs and expenses for the year ended
Increase
2019 2018 (Decrease)
($ in thousands)
COSTS, EXPENSES AND OTHER
Interest expense $1,412 $1,388 $24
Forgiveness of Debt and Interest - (875) 875
Taxes and assessments 5 5 -
Consulting and accounting-
related party 35 36 (1)
Legal and professional 65 95 (30)
General and administrative 55 94 (39)
$1,572 $743 $829 Interest expense relating to the Company's current outstanding debt held by
non-related parties, increased by
11
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
The Company recognized
During the year ended
Taxes and assessments were
Consulting and accounting expense was
Legal and professional expenses decreased by
(Decrease)
($ in thousands)
Legal Form 10K review $9
Legal research escheatment of debentures (37)
Legal Form 8K review (9)
Legal research "going concern" alternatives (12)
Legal common title matters 10
Legal and professional fees environmental remediation 9
$(30) 12
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
General and administrative expenses decreased by
The net loss was
FINANCIAL CONDITION
Total assets decreased by
Increase
2019 2018 (Decrease)
($ in thousands)
Cash $309 $526 $(217)
Land inventory 14 14 -
Other assets 13 13 -
$336 $553 $(217) Net cash used in operating activities was
Cash received from operations during the year ended
13Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
Cash expended for operations during the year ended
Liabilities were
Increase
2019 2018 (Decrease)
($ in thousands)
Accounts payable and accrued expenses
30,455 29,043 1,412
Accrued interest-related party 52,915 52,915 -
Notes payable 1,198 1,198 -
Convertible subordianted debentures payable 8,163 8,163 -
$92,900 $91,549 $1,351
Accounts payable and accrued expenses decreased by
Accrued interest increased by$1,412,000 atDecember 31, 2019 compared toDecember 31, 2018 reflecting changes in the following accrued interest categories: Increase 2019 2018 (Decrease) ($ in thousands) Convertible subordinated debentures$27,070 $25,744 $1,326 Notes Payable 3,385 3,299 86$30,455 $29,043 $1,412 14
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
Accrued interest increased due to no payment of interest expense during the year
ended
The Company's stockholders' deficiency increased to
Off-Balance Sheet Arrangements
The Company has no Off-Balance Sheet Arrangements.
Recent Accounting Standards
Accounting Standards Update (ASU) No. 2014-15, "Presentation of Financial
Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about
an Entity's Ability to Continue as a Going Concern", is effective for interim
and annual periods ending after
ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", is
effective for fiscal years beginning after
15
Forward Looking Statements
The discussion set forth in this Item 7, as well as other portions of this Form
10-K, 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-K. When used in this Form 10-K,
words such as "anticipates," "estimates," "believes," "appears", "expects," and
similar expressions are intended to identify forward-looking statements but are
not the exclusive means of identifying such 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
Item 7A.
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