þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FLORIDA | 59-0867335 | |
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |
212 SOUTH CENTRAL, SUITE 100, ST. LOUIS, MISSOURI 63105
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(Address of principal executive offices)
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(314) 512-8650
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(Registrant’s telephone number, including area code)
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N/A |
(Former Name, Former Address and Former Fiscal year, if changed since last report)
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Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | o | Smaller reporting company | þ |
(Do not check if a smaller reporting company)
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Form 10 - Q
Page No.
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PART I. FINANCIAL INFORMATION | |||
Item 1. | Financial Statements | 3 | |
Condensed Consolidated Statements of Financial Position September 30, 2014 (Unaudited) and December 31, 2013 | 3 | ||
Condensed Consolidated Statements of Operations (Unaudited) Three and Nine Months Ended September 30, 2014 and 2013 | 4 | ||
Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2014 and 2013 | 5 | ||
Notes to Condensed Consolidated Financial Statements (Unaudited) | 6 | ||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 12 | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 18 | |
Item 4. | Controls and Procedures | 18 | |
PART II. OTHER INFORMATION | |||
Item 1. | Legal Proceedings | 19 | |
Item 1A. | Risk Factors | 19 | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 19 | |
Item 3. | Defaults Upon Senior Securities | 19 | |
Item 4. | Mine Safety Disclosures | 19 | |
Item 5. | Other Information | 19 | |
Item 6. | Exhibits | 19 | |
SIGNATURE | 20 | ||
EXHIBIT INDEX | 21 |
September 30, |
December 31,
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|||||||
2014
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2013
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|||||||
(Unaudited)
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ASSETS
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Cash
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$ | 1 | $ | 1 | ||||
Restricted cash
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5 | 5 | ||||||
Receivables-related party
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348 | 440 | ||||||
Land and improvement inventories
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639 | 639 | ||||||
Other assets
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55 | 186 | ||||||
$ | 1,048 | $ | 1,271 | |||||
LIABILITIES
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||||||||
Accounts payable and accrued expenses
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$ | 218 | $ | 219 | ||||
Accrued real estate taxes
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6 | 8 | ||||||
Accrued interest:
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||||||||
Primary lender-related party
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397 | 366 | ||||||
Subordinated convertible debentures payable
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21,147 | 21,007 | ||||||
Convertible debentures payable-related party
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45,700 | 41,071 | ||||||
Notes payable
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3,004 | 2,958 | ||||||
Credit agreements:
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||||||||
Primary lender-related party
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500 | 500 | ||||||
Notes payable
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1,198 | 1,198 | ||||||
Subordinated convertible debentures payable
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8,589 | 9,059 | ||||||
Convertible debentures payable-related party
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1,500 | 1,500 | ||||||
82,259 | 77,886 | |||||||
STOCKHOLDERS' DEFICIENCY
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||||||||
Preferred stock, par value $1.00 per share;
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||||||||
authorized 5,000,000 shares; 2,000,000
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||||||||
Class A cumulative convertible shares issued
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||||||||
and outstanding; (liquidation preference of
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||||||||
$8,000,000 and cumulative dividends)
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2,000 | 2,000 | ||||||
Common stock, par value $.10 per share;
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||||||||
authorized 25,000,000 shares; 5,317,758
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shares issued and outstanding
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532 | 532 | ||||||
Paid-in capital
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13,498 | 13,498 | ||||||
Accumulated deficit
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(97,241 | ) | (92,645 | ) | ||||
(81,211 | ) | (76,615 | ) | |||||
$ | 1,048 | $ | 1,271 |
Three Months Ended
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Nine Months Ended
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|||||||||||||||
September 30, |
September 30,
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September 30, | September 30, | |||||||||||||
2014
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2013
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2014
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2013
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REVENUES
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Interest income-related party
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$ | 3 | $ | 4 | $ | 10 | $ | 12 | ||||||||
3 | 4 | 10 | 12 | |||||||||||||
COSTS EXPENSES AND OTHER
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Interest
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327 | 320 | 976 | 954 | ||||||||||||
Forgiveness of debt and interest | (1,217 | ) | - | (1,217 | ) | - | ||||||||||
Interest-related party
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1,607 | 1,402 | 4,660 | 4,065 | ||||||||||||
Taxes and assessments
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3 | 2 | 7 | 6 | ||||||||||||
Consulting and accounting-
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related party
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9 | 9 | 28 | 29 | ||||||||||||
Legal and professional
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1 | 1 | 8 | 8 | ||||||||||||
General and administrative
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106 | 16 | 144 | 54 | ||||||||||||
836 | 1,750 | 4,606 | 5,116 | |||||||||||||
NET LOSS
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$ | (833 | ) | $ | (1,746 | ) | $ | (4,596 | ) | $ | (5,104 | ) | ||||
NET LOSS PER SHARE(*)
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AVAILABLE TO COMMON
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STOCKHOLDERS-Basic and diluted
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$ | (0.19 | ) | $ | (0.36 | ) | $ | (0.95 | ) | $ | (1.05 | ) | ||||
*Considers the effect of cumulative preferred dividends in arrears for the three and nine months ended
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September 30, 2014 and 2013.
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Nine Months Ended
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September 30, |
September 30,
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2014
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2013
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Net cash used in operating activities
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$ | (92 | ) | $ | (86 | ) | ||
Cash Flows from investing activities:
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Proceeds from notes receivable-related party
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92 | 86 | ||||||
Net cash provided by investing activities
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92 | 86 | ||||||
Net change in cash
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- | - | ||||||
Cash at beginning of period
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1 | 1 | ||||||
Cash at end of period
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$ | 1 | $ | 1 |
(1)
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Basis of Presentation
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(2)
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Per Share Data
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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September 30,
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September 30,
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2014
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2013
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2014
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2013
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Net Loss
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$ | (833,000 | ) | $ | (1,746,000 | ) | $ | (4,596,000 | ) | $ | (5,104,000 | ) | ||||
Preferred dividends
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(160,000 | ) | (160,000 | ) | (480,000 | ) | (480,000 | ) | ||||||||
Loss Available to
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$ | (993,000 | ) | $ | (1,906,000 | ) | $ | (5,076,000 | ) | $ | (5,584,000 | ) | ||||
Common shareholders
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Weighted Average Number
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Of Common Shares
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Outstanding
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5,317,758 | 5,317,758 | 5,317,758 | 5,317,758 | ||||||||||||
Basic and Diluted Loss
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Per Share
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$ | (0.19 | ) | $ | (0.36 | ) | $ | (0.95 | ) | $ | (1.05 | ) |
(5)
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Receivables
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September 30, |
December 31,
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2014
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2013
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($ in thousands)
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Notes receivable - related party
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$ | 348 | $ | 440 |
(6)
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Land and Improvements
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September 30, |
December 31,
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2014
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2013
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($ in thousands)
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Unimproved land
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$ | 625 | $ | 625 | ||||
Fully improved land
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14 | 14 | ||||||
$ | 639 | $ | 639 |
(7)
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Other Assets
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September 30, |
December 31,
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2014
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2013
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($ in thousands)
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Deposit with Trustee of 6-1/2% debentures
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$ | 52 | $ | 184 | ||||
Prepaid expenses
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2 | 1 | ||||||
Other
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1 | 1 | ||||||
$ | 55 | $ | 186 |
(8)
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Accounts Payable and Accrued Expenses
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Accounts payable and accrued expenses consisted of:
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September 30, |
December 31,
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2014
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2013
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($ in thousands)
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Accounts payable
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$ | 5 | $ | - | ||||
Accrued audit & professional
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30 | 36 | ||||||
Accrued consulting fees-related party
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1 | 1 | ||||||
Environmental remediation obligations
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64 | 70 | ||||||
Accrued debenture fees
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118 | 111 | ||||||
Accrued miscellaneous
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- | 1 | ||||||
$ | 218 | $ | 219 | |||||
Accrued real estate taxes consisted of:
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Current real estate taxes
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$ | 6 | $ | 8 |
(9)
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Primary Lender Credit Agreements, Notes Payable, Subordinated and Convertible Debentures Payable
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September 30, |
December 31,
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2014
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2013
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($ in thousands)
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Credit agreements - primary lender-related party
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balance is past due, bearing interest
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at prime plus 5%
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$ | 500 | $ | 500 | ||||
Notes payable - $1,176,000
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bearing interest at prime plus 2%,
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the remainder non-interest bearing,
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all past due
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1,198 | 1,198 | ||||||
1,698 | 1,698 | |||||||
Subordinated debentures payable:
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At 6-1/2% interest; due June 1, 1991
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564 | 1,034 | ||||||
At 6% interest; due May 1, 1992
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8,025 | 8,025 | ||||||
8,589 | 9,059 | |||||||
Collateralized convertible debentures
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payable-related party:
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At 14% interest; due July 8, 1997,
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convertible into shares of common stock
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at $1.72 per share
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1,500 | 1,500 | ||||||
$ | 11,787 | $ | 12,257 |
September 30, |
December 31,
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2014
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2013
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($ in thousands)
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Deferred tax asset
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Net operating loss carryforward
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$ | 22,860 | $ | 20,653 | ||||
Adjustments to reduce land to net realizable value
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12 | 12 | ||||||
Expenses capitalized under IRC 263(a)
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56 | 56 | ||||||
Environmental liability
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27 | 27 | ||||||
Valuation allowance
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(22,783 | ) | (20,576 | ) | ||||
172 | 172 | |||||||
Deferred tax liability:
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Basis difference of land and improvement inventories
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172 | 172 | ||||||
Net deferred tax asset
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$ | - | $ | - |
September 30, |
December 31,
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Increase
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2014
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2013
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(Decrease)
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($ in thousands)
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Cash
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$ | 1 | $ | 1 | $ | - | ||||||
Restricted cash
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5 | 5 | - | |||||||||
Receivables-related party
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348 | 440 | (92 | ) | ||||||||
Land and improvement inventories
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639 | 639 | - | |||||||||
Other assets
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55 | 186 | (131 | ) | ||||||||
$ | 1,048 | $ | 1,271 | $ | (223 | ) |
September 30, | December 31, |
Increase
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||||||||||
2014
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2013
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(Decrease)
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||||||||||
($ in thousands) | ||||||||||||
Accounts payable and accrued expenses
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$ | 218 | $ | 219 | $ | (1 | ) | |||||
Accrued real estate taxes
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6 | 8 | (2 | ) | ||||||||
Accrued interest
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70,248 | 65,402 | 4,846 | |||||||||
Credit agreements:
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- | |||||||||||
Primary lender-related party
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500 | 500 | - | |||||||||
Notes payable
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1,198 | 1,198 | - | |||||||||
Subordinated convertible
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||||||||||||
debentures payable
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8,589 | 9,059 | (470 | ) | ||||||||
Convertible debentures payable-
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||||||||||||
related party
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1,500 | 1,500 | - | |||||||||
$ | 82,259 | $ | 77,886 | $ | 4,373 |
September 30, 2014
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Principal
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Accrued
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|||||||
Amount Due
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Interest
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|||||||
($ in thousands)
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||||||||
Subordinated convertible debentures:
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||||||||
At 6 1/2 %, due June 1, 1991
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$ | 564 | $ | 948 | ||||
At 6%, due May 1, 1992
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8,025 | 20,198 | ||||||
$ | 8,589 | $ | 21,146 | |||||
Collateralized convertible debentures:
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||||||||
At 14%, due July 8, 1997
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$ | 1,500 | $ | 45,700 | ||||
Notes payable:
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||||||||
At prime plus 2%
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$ | 1,176 | $ | 3,004 | ||||
Non-interest bearing
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22 | - | ||||||
$ | 1,198 | $ | 3,004 | |||||
Primary lender-related party:
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$ | 500 | $ | 397 |
PGI Incorporated | |||
November 14, 2014
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By:
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/s/ Laurence A. Schiffer | |
Laurence A. Schiffer | |||
President | |||
(Duly Authorized Officer, Principal Executive Officer and Principal Financial Officer) |
Exhibit No. | Description | |
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. | |
31(i).1 | Principal Executive Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended. | |
31(i).2
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Principal Financial Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended. | |
32.1 | Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350. | |
32.2 | 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.* |
1.
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I have reviewed this quarterly report on Form 10-Q of PGI Incorporated;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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1.
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I have reviewed this quarterly report on Form 10-Q of PGI Incorporated;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
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The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) , as applicable, of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
*A signed original of this written statement has been provided to the Company and will be retained by the Company and will be furnished to the Securities and Exchange Commission or its staff upon request.
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
*A signed original of this written statement has been provided to the Company and will be retained by the Company and will be furnished to the Securities and Exchange Commission or its staff upon request.
|
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