The Company’s remaining land inventory consists of 6 single family lots, an approximate 7 acre parcel and some other minor parcels of real estate consisting of easements in Citrus County Florida, which are owned through its wholly-owned subsidiary, Sugarmill Woods, Inc. (“Sugarmill Woods”). In addition, Punta Gorda Isles Sales, Inc. (“PGIS”), a wholly-owned subsidiary of the Company, owns 12 parcels of real estate in Charlotte County, Florida, which total approximates 60 acres, but these parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale.

The Board of Directors of PGI has concluded that it meets all of the conditions under which a registrant may be deemed an “Inactive Entity” as that term is defined or contemplated in Regulation S-X 3-11 and as the term “Inactive Registrant” is further contemplated in the Securities and Exchange Commission’s Division of Corporation Finance’s Financial Reporting Manual section 1320.2. Under Regulation 3-11 of Regulation S-X, the financial statements required thereunder with respect to an Inactive Registrant for purposes of reports pursuant to the Securities Exchange Act of 1934, including but not limited to annual reports on Form 10-K, may be unaudited. A representative of PGI informally discussed its view that PGI is an Inactive Registrant with a staff member of the Chief Accountant’s Office in the Division of Corporation Finance in February 2019.

As an Inactive Registrant, PGI currently intends to continue to timely file Annual Reports on Forms 10-K with the Securities and Exchange Commission (the “SEC”). PGI currently intends to include in such Annual Reports all annual consolidated financial statements required to be included therein pursuant to Regulation S-X. However, PGI anticipates that the aforementioned annual consolidated financial statements will be reviewed by a PCAOB registered public accounting firm rather than audited by a PCAOB registered public accounting firm. PGI has engaged Milhouse & Neal to be the PCAOB registered public accounting firm that will review its annual consolidated financial statements that will be included in the Annual Report on Form 10-K for its fiscal year ended December 31, 2019 and for its fiscal years thereafter.

PGI meets all of the conditions in Regulation S-X 3-11 for an “Inactive Registrant” which are:

As the Company reviews its circumstances, it has met the conditions as an Inactive Registrant since 2017

The Company, formerly a Florida residential developer, is dormant with less than 70 acres of remaining landholdings, much of which has little value due to various restrictions. The Company’s consolidated financial statements show it has a Stockholders’ Deficiency of $90.9 million as of December 31, 2018. BKD, the Company’s PCAOB registered public accounting firm until the date the Company filed its Form 10-K for Fiscal 2018 which was February 25, 2019, expressed a “going concern” opinion with respect to the Company for its Fiscal 2018 financial statements and had expressed such opinions for many years previously. PGI has had no trading of its securities in many years. Any future real estate transactions by the Company will be limited, uncertain as to timing and as to value. Ultimately, PGI expects that proceeds from sales of its remaining real estate, if any, will provide some minimal recoveries for PGI’s senior debtholders. PGI has been an SEC registrant for over 40 years.

As an Inactive Registrant, PGI will continue to provide comprehensive updates through its SEC filings.

The Trustee of the 6.5% subordinated convertible debentures, which matured in June 1991, with an original face amount of $1,034,000, provided notice of final distribution to holders of such debentures on September 2, 2014. In connection with such final distribution, the Trustee maintainedmaintains a debenture reserve fund with a balance of $13,000 as of March 31,June 30, 2019 and December 31, 2018, respectively, which is available for final distribution of $92 per $1,000 in face amount to holders of such debentures who surrender their respective debenture certificates.

During the threesix month period ended March 31,June 30, 2019, there were no 6.5% subordinated convertible debentures that were surrendered by their respective debenture holders and no funds were utilized from the debenture reserve account.

As of March 31,June 30, 2019 and December 31, 2018, the remaining outstanding principal balance on such 6.5% subordinated convertible debentures that have not been surrendered by the respective holders equals $138,000 plus accrued and unpaid interest of $272,000$275,000 and $270,000, respectively. 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 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.

As of March 31,June 30, 2019, the Company remained in default under its subordinated convertible debentures and notes payable, as well as the accrued interest with respect to its collateralized convertible debentures.

Revenues for the three months ended March 31,June 30, 2019 decreasedincreased by $4,000$2,000 to $1,000$3,000 from $5,000$1,000 for the comparable 2018 period primarily asperiod. Other income of $3,000 received during the three months ended June 30, 2019 represents a result ofrecovery from a lot lien receivable recorded in 1999 which has been fully provided for cancellation. There was no related party interest income earned onother revenue during the short-term note receivable with Love Investment Company (“LIC”), the Company’s primary preferred stock shareholder in 2019. The Company received payment of the note receivable balance from LIC on March 6,three months ended June 30, 2018. Interest income earned on the Company’s money market account wasdecreased by $1,000 for each ofduring the three month periodsmonths ended March 31,June 30, 2019 and 2018.from the comparable period in 2018 due to the declining account balance.

Expenses for the three month period ended March 31,June 30, 2019 increased by $356,000$104,000 when compared to the same period in 2018 primarily as a result of no forgiveness of debt and interest in the three months ended March 31,2019June 30, 2019 as compared to $332,000$111,000 of forgiveness of debt and interest induring the three months ended March 31,June 30, 2018. The forgiveness of debt and interest for the three months ended March 31,June 30, 2018 is attributed to the 6.5% subordinated convertible debentures which matured in June 1991. A face amount of $115,000$20,000 of debentures were effectively surrendered with escheatment of respective funds to the states of debenture holders. In addition, debentures with a face amount of $3,000$19,000 were surrendered by debenture holders. Accordingly, the Company has recognized $107,000$36,000 in forgiveness of debt during the three months ended March 31,June 30, 2018. In addition, accrued interest of $225,000$75,000 on such debentures that are considered surrendered was recorded as forgiveness of interest expense during the three months ended March 31,June 30, 2018.

Interest expense relating to the Company’s current outstanding debt, held by non-related parties, increased by $5,000$6,000 during the three month period ended March 31,June 30, 2019 compared to the same period in 2018, primarily as a result of interest compounding on past due balances. In addition, there was an increase in the prime interest rate to 5.5% as of March 31,June 30, 2019 compared to 4.75%5% as of June 30, 2018.

Revenues for the six months ended June 30, 2018 decreased by $2,000 when compared to the same period in 2018 primarily as a result of no related party interest income earned on the short-term note receivable with Love Investment Company (“LIC”), the Company’s primary preferred stock shareholder in 2019. Related party interest income was $4,000 for the six months ended June 30, 2018. The Company received payment of the note receivable balance from LIC on March 31,6, 2018. Interest income on the Company’s money market account decreased by $1,000 during the six months ended June 30, 2019 from the comparable period in 2018 due to the declining account balance. Other income of $3,000, received during the three months ended June 30, 2019 represents a recovery of a lot lien receivable recorded in 1999 which has been fully provided for cancellation. There was no other revenue during the three months ended June 30, 2018.

Legal and professional expenses during the threesix month period ended March 31,June 30, 2019 increased by $25,000$19,000 when compared to the same period in 2018. Legal expenses increased by $24,000 during the six months ended June 30, 2019 compared to the same period in 2018, primarily as a result of legal expenses incurred in connection with reviewing and editing the Company’s Form 10K and in connection with legal research relating to the Company’s going concern alternatives and SEC Regulation S-X for inactive registrants. Professional expenses decreased by $5,000 during the six months ended June 30, 2019 compared to 2018 as a result of expenses incurred during the six months ended June 30, 2018 on a parcel in Citrus County requiring additional environmental remediation.

Taxes and assessments expense decreased by $1,000 during the six month period ended June 30, 2019 when compared to the same period in 2018. General and administrative expenses decreased by $12,000 during the threesix month period ended March 31,June 30, 2019 decreased by $6,000 when compared to the same period in 2018 primarily as a result of a $4,000 decrease indecreased fees relatingrelated to the filing of the Company’s periodic reports in 2019 as an inactive registrant. In addition, there wasregistrant and a decrease of approximately $2,000 duringin the three month period ended March 31, 2019 compared to the same period in 2018 due to 6% subordinated convertible debenture administration fees in 2018.

During the threesix month period ended March 31,June 30, 2019, the Company’s net cash used in operating activities was $107,000$145,000 compared to $36,000$90,000 for the comparable period in 2018. There was no cash provided from investing activities during the threesix month period ended March 31,June 30, 2019 compared to $560,000 of net cash provided from investing activities in the comparable period in 2018 which consisted of note receivable proceeds received from LIC.

The Company remains in default on the entire principal amount plus interest (including certain sinking fund and interest payments with respect to the subordinated convertible debentures) of its subordinated convertible debentures and notes payable as well as the remaining accrued interest owed with respect to the collateralized convertible debentures.

The Company does not have sufficient funds available (after payment of, or the reserving for the payment of, anticipated future operating expenses) to satisfy the principal or interest obligations on the above debentures and notes payable or any arrearage in preferred dividends.

The Company remains totally dependent upon the sale of parcels of its various remaining properties with respect to its ability to make any future debt service payments.

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, 2018.

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 convertible debentures (notwithstanding the Company’s belief that at least a portion of such actions might be barred under applicable statute of limitations); 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.

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,June 30, 2019. There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31,June 30, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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.