PGAI Pgi Inc

Management Discussion

• There was no revenue for the three month periods ended September 30, 2019 and 2018 as interest earned on the Company’s money market account is minimal due to the declining account balance.
• Expenses for the three month period ended September 30, 2019 increased by $393,000 when compared to the same period in 2018 primarily as a result of no forgiveness of debt and interest in the three months ended September 30, 2019 as compared to $432,000 of forgiveness of debt and interest during the three months ended September 30, 2018. The forgiveness of debt and interest for the three months ended September 30, 2018 is attributed to the 6.5% subordinated debentures which matured in June 1991. A face amount of $152,000 of debentures were effectively surrendered with escheatment of respective funds to the last known state of residency of the debenture holders. Accordingly, the Company recognized $138,000 in forgiveness of debt during the three months ended September 30, 2018. In addition, accrued interest of $294,000 on such debentures considered surrendered was recorded as forgiveness of interest expense during the three months ended September 30, 2018.
• Interest expense relating to the Company’s current outstanding debt, held by non-related parties, increased by $7,000 during the three month period ended September 30, 2019 compared to the same period in 2018, primarily as a result of interest compounding on past due balances. In addition, there was a decrease in the prime interest rate to 5% as of September 30, 2019 compared to 5.25% as of September 30, 2018.