Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 25, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | PGI INC | ||
Entity Central Index Key | 81,157 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 5,317,758 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,018 |
CONSOLIDATED STATEMENTS OF FINA
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
ASSETS | ||
Cash | $ 526 | $ 159 |
Receivables-related party (Note 14) | 0 | 573 |
Land Inventory (Note 4) | 14 | 14 |
Other assets (Note 5) | 13 | 42 |
Total Assets | 553 | 788 |
LIABILITIES | ||
Accounts payable and accrued expenses (Note 6) | 230 | 209 |
Accrued real estate taxes (Note 6) | 0 | 4 |
Accrued Interest: | ||
Subordinated convertible debt (Note 8) | 25,744 | 25,032 |
Convertible debentures-related party (Note 9) | 52,915 | 52,915 |
Notes Payable (Note 7) | 3,299 | 3,218 |
Credit Agreements: | ||
Notes payable (Note 7) | 1,198 | 1,198 |
Subordinated convertible debentures payable (Note 8) | 8,163 | 8,472 |
Liabilities Total | 91,549 | 91,048 |
Commitments and Contingencies (Note 13) | ||
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) (Note 11) | 2,000 | 2,000 |
Common stock, par value $.10 per share; authorized 25,000,000 shares; 5,317,758 shares issued and outstanding (Note 11) | 532 | 532 |
Paid-in capital | 13,498 | 13,498 |
Accumulated deficit | (107,026) | (106,290) |
Total stockholders' deficiency | (90,996) | (90,260) |
Total liabilities and stockholders' deficiency | $ 553 | $ 788 |
CONSOLIDATED STATEMENTS OF FI_2
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
STOCKHOLDERS' DEFICIENCY | ||
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, liquidation preference (excluding cumulative dividends) | $ 8,000 | $ 8,000 |
Preferred stock - Class A cumulative convertible shares, issued | 2,000,000 | 2,000,000 |
Preferred stock - Class A cumulative convertible shares, outstanding | 2,000,000 | 2,000,000 |
Common stock, par value | $ 0.10 | $ 0.10 |
Common stock, authorized | 25,000,000 | 25,000,000 |
Common stock, issued | 5,317,758 | 5,317,758 |
Common stock, outstanding | 5,317,758 | 5,317,758 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues: | ||
Interest income | $ 2 | $ 2 |
Interest income-related party | 5 | 13 |
Total Revenues | 7 | 15 |
Costs and expenses: | ||
Interest | 1,388 | 1,360 |
Forgiveness of Debt and interest | (875) | 0 |
Taxes and assessments | 5 | 5 |
Consulting and accounting-related party | 36 | 37 |
Legal and professional | 95 | 27 |
General and administrative | 94 | 95 |
Total costs and expenses | 743 | 1,524 |
Net Loss before income taxes | (736) | (1,509) |
Income tax expense | 0 | (57) |
Net Income (Loss) | $ (736) | $ (1,566) |
Net Income (Loss) Per Share Available to Common Stockholders Basic (Note 16) | $ (0.26) | $ (0.41) |
Net Income (Loss) Per Share Available to Common Stockholders Diluted (Note 16) | $ (0.26) | $ (0.41) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | ||
Interest Income | $ 2 | $ 2 |
Interest income-related party | 18 | 0 |
Total Proceeds From Operating Activities | 20 | 2 |
Cash expended for operations: | ||
Cost of real estate sales | 0 | 1 |
Taxes and assessments | 9 | 5 |
Consulting and accounting-related party | 37 | 38 |
Legal and professional | 69 | 66 |
General and administrative | 98 | 74 |
Income tax | 0 | 57 |
Cash expended for operations | 213 | 241 |
Net cash flows used in operating activities | (193) | (239) |
Cash flows from investing activities: | ||
Net (advances) repayments of notes receivable-related party | 560 | (560) |
Net cash flows provided by (used in) investing activities | 560 | (560) |
Net change in cash | 367 | (799) |
Cash at beginning of year | 159 | 958 |
Cash at end of year | 526 | 159 |
Reconciliation of net income (loss) to net cash provided by (used in) operating activities: | ||
Net income (loss) | (736) | (1,566) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Forgiveness of debt and interest | (875) | 0 |
Decrease (increase) in assets: | ||
Interest receivable-related party | 13 | (13) |
Increase (decrease) in liabilities: | ||
Accounts payable and accrued expenses | 21 | (21) |
Accrued real estate taxes | (4) | 0 |
Accrued interest | 1,388 | 1,361 |
Net cash flows used in operating activities | (193) | (239) |
Supplemental Cash Flow: | ||
Income taxes paid | $ 0 | $ 57 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Preferrred Stock | ||
Beginning Balance, Shares | 2,000,000 | 2,000,000 |
Beginning Balance, Amount | $ 2,000 | $ 2,000 |
Ending Balance, Shares | 2,000,000 | 2,000,000 |
Ending Balance, Amount | $ 2,000 | $ 2,000 |
Common Stock | ||
Beginning Balance, Shares | 5,317,758 | 5,317,758 |
Beginning Balance, Amount | $ 532 | $ 532 |
Ending Balance, Shares | 5,317,758 | 5,317,758 |
Ending Balance, Amount | $ 532 | $ 532 |
Additional Paid-In Capital | ||
Beginning Balance, Amount | 13,498 | 13,498 |
Ending Balance, Amount | 13,498 | 13,498 |
Accumulated Deficit | ||
Beginning Balance, Amount | (106,290) | (104,724) |
Net lncome (Loss) | (736) | (1,566) |
Ending Balance, Amount | (107,026) | (106,290) |
Beginning Balance, Amount | (90,260) | (88,694) |
Net lncome (Loss) | (736) | (1,566) |
Ending Balance, Amount | $ (90,996) | $ (90,260) |
1. Nature of Business and Going
1. Nature of Business and Going Concern | 12 Months Ended |
Dec. 31, 2018 | |
Nature Of Business And Going Concern | |
Nature of Business and Going Concern | PGI Incorporated and Subsidiaries (the Company), a Florida corporation, was founded in 1958, and up until the mid 1990’s was in business of building and selling homes, developing and selling home sites and selling undeveloped or partially developed tracts of land. Over approximately the last 25 years, the Company’s business focus and emphasis changed substantially as it has concentrated its sales and marketing efforts almost exclusively on the disposition of its remaining real estate. The Company has a significant accumulated deficit and is in default of certain sinking fund and interest payments on its convertible subordinated debentures (Note 8). The Company’s major 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 Florida counties. These parcels have limited value because of associated development.constraints such as wetlands, easements and other obstacles to development and sale. The potential values of the land parcels held for sale has been difficult to assess as the remaining land inventory is difficult to sell and difficult to value. While the Company will seek to realize full market value for each remaining asset, the amounts realized may be at substantial variance from its present financial statement carrying value. Certain of these assets may be of so little value and marketability that the Company may elect not to pay the real estate taxes on selected parcels, which may eventually result in a defacto liquidation of such property by subjecting such property to a tax sale. In management’s judgment, the assets will be insufficient to satisfy much, if any, of the outstanding indebtedness and there will be no recoveries by the shareholders. Consequently, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. 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. |
2. Significant Accounting Polic
2. Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after eliminating all significant inter-company transactions. Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue and Profit Recognition Change in Accounting Principle In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” which requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We adopted this standard using the modified retrospective approach. The adoption of ASU 2014-09 did not have an impact on the Company’s consolidated financial statements. Acreage Sales of undeveloped and developed acreage tracts are recognized, net of any deferred revenue and valuation discount. Land Inventory Land inventory is stated at cost. Cash The Company’s cash accounts exceed federally insured limits by approximately $276,000. |
3. Interest Income
3. Interest Income | 12 Months Ended |
Dec. 31, 2018 | |
Interest Income | |
Interest Income | Interest income totaled $7,000 for the year ended December 31, 2018 compared to interest income of $15,000 for the year ended December 31, 2017. Related party interest income decreased by $8,000 during the year ended December 31, 2018 to $5,000 from $13,000 for the comparable period in 2017. The related party interest income is the result of the Company’s investment in a $560,000 short term note with LIC, which investment was made during the year ended December 31, 2017. The Company received payment of the outstanding note receivable from LIC in March, 2018. Interest income of $2,000, represents interest earned on the Company’s money market account during the years ended December 31, 2018 and 2017. |
4. Land Inventory
4. Land Inventory | 12 Months Ended |
Dec. 31, 2018 | |
Real Estate [Abstract] | |
Land Inventory | Land inventory consisted of: 2018 2017 ($ in thousands) Fully improved land 14 14 $ 14 $ 14 |
5. Other Assets
5. Other Assets | 12 Months Ended |
Dec. 31, 2018 | |
Other Assets [Abstract] | |
Other Assets | Other assets consisted of: 2018 2017 ($ in thousands) Deposit with Trustee of 6.5% debentures $ 13 $ 41 Deferred charges - 1 $ 13 $ 42 |
6. Accounts Payable and Accrued
6. Accounts Payable and Accrued Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of: 2018 2017 ($ in thousands) Accounts payable $ 18 $ 15 Accrued audit/tax expense 43 47 Accrued consulting fees-related party 1 1 Accrued legal 14 - Accrued debenture fees 153 145 Accrued miscellaneous 1 1 $ 230 $ 209 Accrued Real Estate Taxes: Accrued real estate taxes consisted of: 2018 2017 ($ in thousands) Current accrued real estate taxes $ - $ 4 |
7. Notes Payable
7. Notes Payable | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable | Notes payable consisted of the following: 2018 2017 ($ in thousands) Notes Payable- At prime plus 2%, due October 1, 1985 $ 176 $ 176 At prime plus 2%, due October 1, 1987 1,000 1,000 Non-interest bearing, due August 1, 1993 22 22 $ 1,198 $ 1,198 The prime rate at December 31, 2018 and 2017, was 5.5% and 4.5%, respectively. The overall weighted-average interest rate for the Company’s credit agreements with its notes and mortgages was approximately 6.8% and 6.0% at December 31, 2018 and 2017, respectively. Accrued interest on notes payable consisted of the following: 2018 2017 ($ in thousands) Notes Payable- At prime plus 2%, due October 1, 1985 $ 464 $ 452 At prime plus 2%, due October 1, 1987 2,835 2,766 $ 3,299 $ 3,218 All of the outstanding notes payable including accrued interest are past due. |
8. Subordinated Convertible Deb
8. Subordinated Convertible Debentures Payable | 12 Months Ended |
Dec. 31, 2018 | |
Convertible Subordinated Debt [Abstract] | |
Subordinated Convertible Debentures Payable | Subordinated debentures payable consisted of: 2018 2017 ($ in thousands) 6.5%, due June, 1991 $ 138 $ 447 6%, due May, 1992 8,025 8,025 $ 8,163 $ 8,472 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 a final distribution to holders of such debentures on September 2, 2014. In connection with such final distribution, the Trustee has maintained a debenture reserve fund with a balance of $13,000 and $41,000 as of December 31, 2018 and 2017, respectively, available for distribution to holders of such debentures who surrender their respective debenture certificates. During the year ended December 31, 2018, $28,000 of the debenture reserve funds were utilized with $2,000 disbursed in final distribution to debenture holders and $26,000 disbursed in escheatment to states of respective debenture holders as debentures with a face amount of $22,000 were surrendered by debenture holders and $287,000 in face amount of debentures were effectively surrendered with the escheatment of respective funds to the states of debenture holders, respectively. Accordingly, the Company has recognized $281,000 in forgiveness of debt during the year ended December 31, 2018. In addition, accrued interest of $594,000 on such debentures that are considered surrendered was recorded as forgiveness of interest expense during the year ended December 31, 2018. There were no debentures surrendered or escheated in 2017 and no funds were utilized from the debenture reserve account. As of December 31, 2018, the outstanding principal balance on such 6.5% subordinated convertible debentures that were not surrendered by the respective holders, or escheated by the Trustee to the states of residence of the respective holders, equals $138,000 plus accrued and unpaid interest of $270,000. The outstanding principal on such respective debentures as of December 31, 2017 was $447,000 plus accrued and unpaid interest of $846,000. The 6.5% Subordinated convertible debenture balances for the years ended December 31, 2018 and 2017 are as follows: 2018 2017 ($ in thousands) Original face value $ 1,034 $ 1,034 Outstanding debenture principal balance 138 447 Face value of debentures surrendered 22 - Face value of debentures escheated 287 - Accrued and unpaid interest balance 270 846 Debenture reserve account balance 13 41 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, the applicable portion of such principal and accrued interest will similarly be recorded as debt and 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. Since issuance, $650,000 and $152,000 of the 6.5% and 6% debentures, respectively, have been converted into common stock. This conversion feature is no longer in effect. The Company is in default of certain sinking fund and interest payments on both subordinated convertible debentures totaling $8,163,000 and $8,472,000 in principal plus accrued and unpaid interest of $25,744,000 and $25,032,000 as of December 31, 2018 and 2017, respectively. The debentures are not collateralized and are not subordinate to each other, but are subordinate to senior indebtedness ($1,198,000 at December 31, 2018 and 2017). Payment of dividends on the Company’s common stock is restricted under the terms of the two indentures pursuant to which the outstanding debentures are issued. In order to maximize the amounts realized for the debt holders, the Company has been and intends to continue to seek buyers for the remaining landholdings. No assurances are offered regarding the timing of or the values to be realized from future land sales. |
9. Convertible Debentures Payab
9. Convertible Debentures Payable | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Debentures Payable | In May 2008, LIC purchased $703,000 in principal amount of the Company’s convertible debentures from the previous debenture holder. The balance of the outstanding convertible debentures in the amount of $797,000, were held by Love-1989. The debentures held by Love-1989 and LIC were secured by a second mortgage behind PGIP on the 366 acres retained by the Company and a security interest behind that held by PGIP in the restricted proceeds escrow. The total debentures balance of $1,500,000 carried a maturity date of July 8, 1997 and were in default as of December 31, 2015 and paid off in 2016. Interest on the debentures accrued at the rate of fourteen percent compounded quarterly. The Company’s primary lender credit agreements prohibit the payment of interest until such time as the primary lender loans are repaid. The convertible debentures and a portion of the accrued interest were paid in 2016. The remaining accrued interest is $52,915,000 as of December 31, 2018 and 2017. |
10. Income Taxes
10. Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Reconciliation of the statutory federal income tax rates, 21% and 34% for the years ended December 31, 2018 and 2017, to the Company’s effective income tax rates follows: 2018 2017 ($ in thousands) Percent of Percent of Amount of tax Pre-tax Loss Amount of tax Pre-tax Loss Expected tax credit $ (155 ) -21.0 % $ (513 ) -34.0 % State income taxes, net of federal tax benefits (29 ) -4.0 % (60 ) -4.0 % Decrease in environmental liability - 0.0 % 7 0.0 % Increase (decrease) in valuation allowance 184 25.0 % 623 41.0 % $ - 0.0 % $ 57 3.0 % The Company recognized an income tax expense of $57,000 during the year ended December 31, 2017 for the 2016 Alternative Minimum tax on the 2016 gain recognized on the sales of real estate. At December 31, 2018, the Company had an operating loss carryforward of approximately $68,476,000, the majority of which will expire at various dates through 2037. 2018 2017 ($ in thousands) Deferred tax asset: Net operating loss carryover $ 17,119 $ 16,948 Expenses capitalized under IRC 263(a) 37 37 Tax credits (AMT) 57 57 Valuation allowance (17,213 ) (17,042 ) Net deferred tax asset $ - $ - The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2015. |
11. Capital Stock
11. Capital Stock | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Capital Stock | Effective December 31, 2016, L-PGI liquidated and assigned the 2,260,706 shares of common stock of the Company and 1,875,000 shares of preferred stock of the Company, that were held by L-PGI to LIC, in conjunction with settling its remaining indebtedness. LIC was the general partner of L-PGI and is owned, directly or indirectly, by Andrew S. Love and Laurence A. Schiffer, which are the directors and executive officers of the Company. In March 1987, the Company sold, in a private placement, 1,875,000 shares of its Class A cumulative convertible preferred stock to L-PGI for a purchase price of $7,500,000 cash ($4.00 per share). The Company also converted $500,000 of indebtedness owed to a corporation owned by the Company’s former Chairman of the Board of Directors and members of his family into 125,000 shares of the cumulative convertible preferred stock. The holders of the preferred stock are entitled to one vote per share and, except as provided by law, will vote as one class with the holders of the common stock. Class A preferred stockholders are also entitled to receive cumulative dividends at the annual rate of $.32 per share, an effective yield of 8%. Dividends accrued for an initial two year period and, at the expiration of this period, preferred stockholders had the option of receiving accumulated dividends, when and if declared by the Board of Directors, in cash (unless prohibited by law or contract) or common stock. At December 31, 2018 cumulative preferred dividends in arrears totaled $15,155,000 ($640,000 of which related to the year ended December 31, 2018). On May 15, 1997 preferred dividends accrued through April 25, 1995 totaling $4,260,000 were paid in the form of 2,000,203 shares of common stock. As of December 31, 2018 and 2017, the preferred stock is callable or redeemable at the option of the Company at $4.00 per share plus accrued and unpaid dividends. In addition, the preferred stock will be entitled to preference of $4.00 per share plus accrued and unpaid dividends in the event of liquidation of the Company. At December 31, 2018 and 2017, the Company had reserved 3,756,000 common shares for the conversion of preferred stock. |
12. Quarterly Results
12. Quarterly Results | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Results | There were no significant transactions in the fourth quarter of 2018. |
13. Commitments and Contingenci
13. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company. |
14. Related Party Transactions
14. Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | The Company’s primary preferred shareholder is LIC which is primarily owned and managed by Andrew S. Love and Laurence A. Schiffer. Messrs. Love and Schiffer serve as the executive officers and directors of the Company. In May 2008, LIC purchased $703,000 in principal amount of the Company’s convertible debentures from the previous debenture holder. The balance of the outstanding convertible debentures in the amount of $797,000, were held by Love-1989. The debentures held by Love-1989 and LIC were secured by a second mortgage behind PGIP on the 366 acres retained by the Company and a security interest behind that held by PGIP in the restricted proceeds escrow. The total debentures balance of $1,500,000 carried a maturity date of July 8, 1997 and were in default as of December 31, 2015 and paid off in 2016. Interest on the debentures accrued at the rate of fourteen percent compounded quarterly. The Company’s primary lender credit agreements prohibit the payment of interest until such time as the primary lender loans are repaid. The convertible debentures and a portion of the accrued interest were paid in 2016. The remaining accrued interest is $52,915,000 as of December 31, 2018 and 2017. PGIP is owned and managed by Hallmark Investment Corporation (“HIC”). Messrs. Love and Schiffer are directors and executive officers of HIC and own 90% of all the issued and outstanding voting stock of HIC. The Company maintains its administration and accounting offices with Love Real Estate Company (“LREC”). LREC, which is owned by LIC, is paid a monthly fee for the following: 1. Maintain books of original entry; 2. Prepare quarterly and annual SEC filings; 3. Coordinate the annual audit; 4. Assemble information for tax filing, review reports as prepared by tax accountants and file same; 5. Track shareholder records through transfer agent; 6. Maintain policies of insurance against property and liability exposure; 7. Handle day-to-day accounting requirements In addition, the Company receives office space, telephone service and computer service from LREC. A fee of $2,800 per month was accrued in 2018 and 2017. The Company made payments of $33,600 to LREC in 2018 and 2017 for accounting service fees. There were no accrued accounting service fees as of December 31, 2018 and 2017. The Company has a Management Consulting Agreement with LREC. As a consultant to the Company and in addition to the above services, LREC provides other services including, but not limited to, strategic planning, marketing and financing as requested by the Company. In consideration for these consulting services, the Company pays LREC a quarterly consulting fee of one-tenth of one percent of the carrying value of the Company’s assets, plus reasonable out-of-pocket expenses. As of December 31, 2018 and 2017, the carrying value of the Company’s assets was approximately $553,000 and $788,000 respectively. Consulting fees were $3,000 and $4,000 in 2018 and 2017, respectively. As of both December 31, 2018 and 2017, a total of $1,000 of unpaid fees had accrued under this agreement. During 2017, the Company invested in a short-term note receivable of $560,000 with LIC, bearing interest of 4.5% per annum with an original maturity of December 31, 2017, which was extended one year through December 31, 2018. The interest receivable on the related party note receivable was $13,000 at December 31, 2017. The Company received payment of the outstanding note receivable from LIC in March 2018 of $578,000, including the note receivable balance of $560,000 and accrued interest receivable of $18,000. In 1985 a corporation owned by the former Chairman of the Board and his family made an uncollateralized loan to the Company, which at December 31, 2018 and 2017 had an outstanding principal balance of $176,000 plus accrued interest of $464,000 and $452,000, totaling an outstanding balance of $640,000 and $628,000, respectively. Interest accrued on this loan was $12,000 and $11,000 in 2018 and 2017, respectively. |
15. Fair Value of Financial Ins
15. Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value: Cash: The carrying amount approximates fair value because of the short maturity of those instruments. Receivables: The carrying amount approximates fair value because of the short-term maturity of those receivables. Accounts Payable: The carrying amount approximates fair value because of the short-term maturity of those debts. Debt: It was not practicable to estimate the fair value of the Company’s notes payable and its subordinated convertible debentures because these debts are in default causing no basis for estimating value by reference to quoted market prices or current rates offered to the Company for debt of the same remaining maturities. The estimated fair values of the Company’s financial instruments are as follows: 2018 2017 ($ in thousands) Carrying Fair Carrying Fair Amount Value Amount Value Cash $ 526 $ 526 $ 159 $ 159 Receivables - - 573 573 Accounts payable 18 18 15 15 Debt 9,361 - 9,670 - |
16. Loss Per Share
16. Loss Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Loss Per Share | The following is a summary of the calculations used in computing basic and diluted loss per share: 2018 2017 ($ in thousands, except share data) Numerator: Net Loss $ (736 ) $ (1,566 ) Preferred Dividends (640 ) (640 ) Loss Available to Common Shareholders $ (1,376 ) $ (2,206 ) Denominator: Basic and Diluted Weighted average amount of shares outstanding 5,317,758 5,317,758 Loss per share Basic $ (0.26 ) $ (0.41 ) Diluted $ (0.26 ) $ (0.41 ) |
2. Significant Accounting Pol_2
2. Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after eliminating all significant inter-company transactions. |
Accounting Estimates | The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Revenue and Profit Recognition | In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” which requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We adopted this standard using the modified retrospective approach. The adoption of ASU 2014-09 did not have an impact on the Company’s consolidated financial statements. |
Acreage | Sales of undeveloped and developed acreage tracts are recognized, net of any deferred revenue and valuation discount. |
Land Inventory | Land inventory is stated at cost. |
Cash | The Company’s cash accounts exceed federally insured limits by approximately $276,000. |
4. Land Inventory (Tables)
4. Land Inventory (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Land Inventory Tables Abstract | |
Land Inventory | 2018 2017 ($ in thousands) Fully improved land 14 14 $ 14 $ 14 |
5. Other Assets (Tables)
5. Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Assets Tables Abstract | |
Other Assets | 2018 2017 ($ in thousands) Deposit with Trustee of 6.5% debentures $ 13 $ 41 Deferred charges - 1 $ 13 $ 42 |
6. Accounts Payable and Accru_2
6. Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accounts payable and accrued expenses consist | 2018 2017 ($ in thousands) Accounts payable $ 18 $ 15 Accrued audit/tax expense 43 47 Accrued consulting fees-related party 1 1 Accrued legal 14 - Accrued debenture fees 153 145 Accrued miscellaneous 1 1 $ 230 $ 209 |
Accrued Real Estate Taxes | 2018 2017 ($ in thousands) Current accrued real estate taxes $ - $ 4 |
7. Notes Payable (Tables)
7. Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Credit agreements with the Company's primary lender and notes payable | 2018 2017 ($ in thousands) Notes Payable- At prime plus 2%, due October 1, 1985 $ 176 $ 176 At prime plus 2%, due October 1, 1987 1,000 1,000 Non-interest bearing, due August 1, 1993 22 22 $ 1,198 $ 1,198 |
Accrued interest on notes payable | 2018 2017 ($ in thousands) Notes Payable- At prime plus 2%, due October 1, 1985 $ 464 $ 452 At prime plus 2%, due October 1, 1987 2,835 2,766 $ 3,299 $ 3,218 |
8. Subordinated Convertible D_2
8. Subordinated Convertible Debentures Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Convertible Subordinated Debt [Abstract] | |
Subordinated debentures payable | 2018 2017 ($ in thousands) 6.5%, due June, 1991 $ 138 $ 447 6%, due May, 1992 8,025 8,025 $ 8,163 $ 8,472 |
6.5% subordinated convertible debenture | 2018 2017 ($ in thousands) Original face value $ 1,034 $ 1,034 Outstanding debenture principal balance 138 447 Face value of debentures surrendered 22 - Face value of debentures escheated 287 - Accrued and unpaid interest balance 270 846 Debenture reserve account balance 13 41 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 - |
10. Income Taxes (Tables)
10. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of the statutory federal income tax rates | 2018 2017 ($ in thousands) Percent of Percent of Amount of tax Pre-tax Loss Amount of tax Pre-tax Loss Expected tax credit $ (155 ) -21.0 % $ (513 ) -34.0 % State income taxes, net of federal tax benefits (29 ) -4.0 % (60 ) -4.0 % Decrease in environmental liability - 0.0 % 7 0.0 % Increase (decrease) in valuation allowance 184 25.0 % 623 41.0 % $ - 0.0 % $ 57 3.0 % |
Deferred tax assets/liabilities | 2018 2017 ($ in thousands) Deferred tax asset: Net operating loss carryover $ 17,119 $ 16,948 Expenses capitalized under IRC 263(a) 37 37 Tax credits (AMT) 57 57 Valuation allowance (17,213 ) (17,042 ) Net deferred tax asset $ - $ - |
15. Fair Value of Financial I_2
15. Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Of Financial Instruments | |
Estimated fair values of the Company's financial instruments | 2018 2017 ($ in thousands) Carrying Fair Carrying Fair Amount Value Amount Value Cash $ 526 $ 526 $ 159 $ 159 Receivables - - 573 573 Accounts payable 18 18 15 15 Debt 9,361 - 9,670 - |
16. Loss Per Share (Tables)
16. Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Summary of the calculations used in computing basic and diluted loss per share | 2018 2017 ($ in thousands, except share data) Numerator: Net Loss $ (736 ) $ (1,566 ) Preferred Dividends (640 ) (640 ) Loss Available to Common Shareholders $ (1,376 ) $ (2,206 ) Denominator: Basic and Diluted Weighted average amount of shares outstanding 5,317,758 5,317,758 Loss per share Basic $ (0.26 ) $ (0.41 ) Diluted $ (0.26 ) $ (0.41 ) |
3. Interest Income (Details Nar
3. Interest Income (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Real Estate Sales And Interest Income Details Narrative Abstract | ||
Total interest income | $ 7 | $ 15 |
Interest earned | 2 | 2 |
Related party interest income | $ 5 | $ 13 |
4. Land Inventory (Details)
4. Land Inventory (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Land and improvement inventories | ||
Fully improved land | $ 14 | $ 14 |
Total | $ 14 | $ 14 |
5. Other Assets (Details)
5. Other Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Other assets consisted of: | ||
Deposit with Trustee of 6 1/2% debentures | $ 13 | $ 41 |
Deferred charges | 0 | 1 |
Total Other Assets | $ 13 | $ 42 |
6. Accounts Payable and Accru_3
6. Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts payable and accrued expenses | ||
Accounts payable | $ 18 | $ 15 |
Accrued audit/tax expense | 43 | 47 |
Accrued consulting fees-related party | 1 | 1 |
Accrued legal | 14 | 0 |
Accrued debenture fees | 153 | 145 |
Accrued miscellaneous | 1 | 1 |
Total | 230 | 209 |
Accrued real estate taxes consisted of: | ||
Current accrued real estate taxes | $ 0 | $ 4 |
7. Notes Payable (Details)
7. Notes Payable (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Notes payable | $ 1,198 | $ 1,198 |
Total | 1,198 | 1,198 |
At prime plus 2%, due October 1, 1985 | ||
Notes payable | 176 | 176 |
At prime plus 2%, due October 1, 1987 | ||
Notes payable | 1,000 | 1,000 |
Non-interest bearing, due August 1, 1993 | ||
Notes payable | $ 22 | $ 22 |
7. Notes Payable (Details 1)
7. Notes Payable (Details 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued interest on notes payable | $ 3,299 | $ 3,218 |
At prime plus 2%, due October 1, 1985 | ||
Accrued interest on notes payable | 464 | 452 |
At prime plus 2%, due October 1, 1987 | ||
Accrued interest on notes payable | $ 2,835 | $ 2,766 |
7. Notes Payable (Details Narra
7. Notes Payable (Details Narrative) | Dec. 31, 2018 | Dec. 31, 2017 |
Credit Agreements Primary Lender And Notes Payable Details Narrative Abstract | ||
Prime rate | 5.50% | 4.50% |
Weighted-average interest rate | 6.80% | 6.00% |
8. Subordinated Convertible D_3
8. Subordinated Convertible Debentures Payable (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Subordinated convertible debentures payable | $ 8,163 | $ 8,472 |
6 and 1/2 %, due June 1991 | ||
Subordinated convertible debentures payable | 138 | 447 |
6%, due May 1992 | ||
Subordinated convertible debentures payable | $ 8,025 | $ 8,025 |
8. Subordinated Convertible D_4
8. Subordinated Convertible Debentures Payable (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
6.5% Subordinated convertible debenture | ||
Original face value | $ 1,034 | $ 1,034 |
Outstanding debenture principal balance | 138 | 447 |
Face value of debentures surrendered | 22 | 0 |
Face value of debentures escheated | 287 | 0 |
Accrued and unpaid interest balance | 270 | 846 |
Debenture reserve account balance | 13 | 41 |
Debenture reserve funds utilized in payment of final distribution | 2 | 0 |
Debenture reserve funds utilized in escheatment to states of debenture holders | 26 | 0 |
Forgiveness of debt | 281 | 0 |
Forgiveness of interest | $ 594 | $ 0 |
9. Convertible Debentures Pay_2
9. Convertible Debentures Payable (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued Interest Convertible Debentures Payable Abstract | ||
Accrued Interest Convertible Debentures Payable - Related Party | $ 52,915 | $ 52,915 |
10. Income Taxes (Details)
10. Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes Details Abstract | ||
Expected tax (credit) | $ (155) | $ (513) |
State income taxes, net of federal tax benefits | (29) | (60) |
Decrease in environmental liability | 0 | 7 |
Increase (decrease in valuation allowance) | 184 | 623 |
Income Tax Expense Benefit Continuing Operations | $ 0 | $ 57 |
Expected tax (credit), Percentage | (21.00%) | (34.00%) |
State income taxes, net of federal tax benefits, Percentage | (4.00%) | (4.00%) |
Decrease in environmental liability, Percentage | 0.00% | 0.00% |
Increase (decrease in valuation allowance) Percentage | 25.00% | 41.00% |
Effective Income Tax Rate Continuing Operations | 0.00% | 3.00% |
10. Income Taxes (Details 1)
10. Income Taxes (Details 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax asset: | ||
Net operating loss carryover | $ 17,119 | $ 16,948 |
Expenses capitalized under IRC 263(a) | 37 | 37 |
Tax credits (AMT) | 57 | 57 |
Valuation allowance | (17,213) | (17,042) |
Total tax asset | $ 0 | $ 0 |
10. Income Tax (Details Narrati
10. Income Tax (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax | ||
Operating loss carryforward | $ 68,476 | |
Operating losses expiry date | 2,037 | |
Statutory Federal Income tax rates | (21.00%) | (34.00%) |
11. Capital Stock (Details Narr
11. Capital Stock (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Capital Stock Details Narrative Abstract | ||
Cumulative preferred dividends in arrears | $ 15,155 | |
Preferred stock is callable or redeemable at the option of the Company | $ 4 | $ 4 |
Common shares reserved for the conversion of preferred stock and debentures | 3,756,000 | 3,756,000 |
14. Related Party Transactions
14. Related Party Transactions (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transactions [Abstract] | ||
Carrying value of the Company's assets | $ 553 | $ 788 |
Consulting fees, related party | 3 | 4 |
Outstanding principal plus accrued interest | 640 | 628 |
Interest Accrued | 12 | 11 |
Interest income, related party | $ 5 | $ 13 |
15. Fair Value of Financial I_3
15. Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Cash | $ 526 | $ 159 | $ 958 |
Receivables | 0 | 573 | |
Carrying amount | |||
Cash | 526 | 159 | |
Receivables | 0 | 573 | |
Accounts Payable | 18 | 15 | |
Debt | 9,361 | 9,670 | |
Fair value | |||
Cash | 526 | 159 | |
Receivables | 0 | 573 | |
Accounts Payable | 18 | 15 | |
Debt | $ 0 | $ 0 |
16. Loss Per Share (Details)
16. Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator: | ||
Net Loss | $ (736) | $ (1,566) |
Preferred Dividends | (640) | (640) |
Loss Available to Common Shareholders | $ (1,376) | $ (2,206) |
Denominator: | ||
Weighted average amount of shares outstanding, Basic and Diluted | 5,317,758 | 5,317,758 |
Basic | $ (0.26) | $ (0.41) |
Diluted | $ (0.26) | $ (0.41) |