Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant, based upon the closing price of the registrant’s common stock on the last business day of the registrant’s most recently completed second fiscal quarter ($3.50)11.24), was $5,544,123.$18,652,319. Solely for the purpose of this calculation, shares held by directors and executive officers of the registrant have been excluded.  Such exclusion should not be deemed a determination or an admission by the registrant that such individuals are, in fact, affiliates of the registrant.

The number of outstanding shares of the registrant’s common stock was 2,227,6842,617,268 as of March 29, 201023, 2011.

.

THE LGL GROUP, INC.

PART I

This Annual Report on Form 10-K contains forward-looking statements, including statements regarding, among other things, (a) our projected sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans and (e) our anticipated needs for working capital. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” as well as in this Annual Report generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this Annual Report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Annual Report will in fact be accurate.

Further, we do not undertake any obligation to publicly update any forward-looking statements.  As a result, you should not place undue reliance on these forward-looking statements.

The LGL Group, Inc., formerly Lynch Corporation, incorporated in 1928 under the laws of the State of Indiana and reincorporated under the laws of the State of Delaware in 2007, is a holding company with subsidiaries engaged in manufacturing custom-designed highlythe design, manufacture and sale of standard and custom engineered electronic components.  The LGL Group, Inc. and its subsidiaries (collectively, the “Company”) maintains its executive offices at 2525 Shader Road, Orlando, Florida 32804.  The Company’s telephone number is (407) 298-2000.  The Company’s common stock is traded on NYSE Amex under the ticker symbol “LGL”.

The Company operates through its principal subsidiary, M-tron Industries, Inc. (“Mtron”), which includes the operations of its subsidiary, M-tron Industries, Ltd. (“Mtron”), and Mtron’s subsidiariesas well as the operations of its subsidiary, Piezo Technology, Inc. (“PTI”) and PTI’s subsidiary Piezo Technology India Private Ltd (jointly, “PTI”).Ltd.  The combined operations of Mtron and PTI and their subsidiaries are referred to herein as “MtronPTI.”  MtronPTI has operations in Orlando, Florida, Yankton, South Dakota and Noida, India.  In addition, MtronPTI also has a sales officeoffices in Hong Kong.Kong and Shanghai, China.

The Company’s business development strategy is to expand its existing operations primarily through organic growth, and joint venture or merger and acquisition opportunities.  It may, from time to time, consider the acquisition of other assets or businesses that are not related to its present businesses.  However, the Company’s ability to consummate an acquisition will be largely dependent on its ability to obtain financing, and currentwhich may be hindered by the prevailing global economic and financial market conditions, including severe disruptions in credit markets and the potential for a significant and prolonged global economic recession, may hinder the Company’s ability to obtain such financing.conditions.

MtronPTI designs, manufactures and marketssells standard and custom designed highly-engineeredengineered electronic components that are used primarily to control the frequency or timing of signals in electronic circuits.  Its devices, which are commonly called frequency control devices, are used extensively in infrastructure equipment for the telecommunications and network equipment industries.  Its devices are also used in electronic systems for military applications, avionics, earth orbitingearth-orbiting satellites, medical devices, instrumentation, industrial devices and global positioning systems.

MtronPTI’s frequency control devices consist of packaged quartz crystals, crystal oscillators and electronic filters.  Its products produce an electrical signal that has the following attributes:

MtronPTI has more than 40 years of experience designing, manufacturing and marketing crystal basedcrystal-based frequency control products.  Its customers rely on the skills of MtronPTI’s engineering and design team to help solve frequency control problems during all phases of their products’ life cycles, including product design, prototyping, manufacturing, and subsequent product improvements.

MtronPTI has built on the strength of its core expertise in packaged quartz crystal oscillator technologies and electronic filter technologies to become the supplier of choice to original equipment manufacturers (“OEMs”) that supply equipment with high-performance timing needs.  MtronPTI intends to grow through strong penetration of the timing and timing management portion of the electronics industry.  MtronPTI continueshas made progress in its efforts to work towards growinggrow beyond being only a component company toby expanding its product offerings and focusing a company offeringportion of its development efforts towards products that include integrated timing systems, timing system design services and engineered timing management products.

MtronPTI focuses on technical resources, including design and engineering personnel, to enable it to provide a higher level of design and engineering support to its customers and potential customers.  It believes that technical participation with its original equipment manufacturer (“OEM”)OEM customers in the early stages of their design process will lead to MtronPTI’s frequency control devices being designed into their products more regularly.

MtronPTI has a long-standing relationship with offshore contract manufacturers to take advantage of lower manufacturing costs.  These contract manufacturers have added increased technological support and infrastructure to increase capacity on MtronPTI’s behalf.  MtronPTI’s near term objective is to reduce the time it takes to manufacture its products, which will result in better service to its customers.

MtronPTI is continuing its efforts to design, manufacture and sell devices that offer higher frequencies or greater precision than its current products.  It also plans to expand its offering of integrated timing systems to offer complete timing subsystems to its customers.  It intends to achieve this through a combination of focused research and development, and strategic acquisitions, if they are appropriate.

MtronPTI believes that it may be able to significantly enhance its business opportunities by acquiring technology, product portfolios, new design capabilities, and/or access to a portfolio of targeted customers.  Some of these may offer immediate sales opportunities, while others may meet longer-term objectives.  It plans to pursue these opportunities by making strategic acquisitions or by acquiring or licensing technology.

MtronPTI’s products are high quality, reliable, technically advanced frequency control devices, including packaged quartz crystals, oscillators incorporating those crystals and electronic filter products.  The October 2002 acquisition of “Champion”Champion Technologies provided MtronPTI an entry to the timing modules market.  The September 2004 acquisition of PTI provided MtronPTI with its families of very high precisionprecise oven-controlled crystal oscillators and its electronic filter products.

 

MtronPTI designs and produces a wide range of packaged quartz crystals, quartz crystal basedcrystal-based oscillators and electronic filter products.  The Packaged Crystal is a single crystal in a hermetically sealed package andthat is used by

Currently, MtronPTI’s oscillator products operate at frequencies ranging from 2 kilohertz to over 1.4 gigahertz, which constitute most of the oscillator frequencies that are now in use in its target markets.  It offers crystal and inductive/capacitive filters with central frequencies from a Direct Current to 15 gigahertz.  However, many of its products, through amplification or other means, are ultimately incorporated into products that operate at higher frequencies.

The vast majority of MtronPTI’s products are custom-designed for requirements of specific OEM systems.  The expected business life of these products ranges from less than one year to more than 10 years, depending on the application.  Some of the customizations are modest changes to existing product designs, while others are major product redesigns or new product platforms.  MtronPTI monitors the level of these major new designs and uses them as an internal metric of its engineering effectiveness.  In the past, it is typical forTypically, approximately 10% of MtronPTI’s revenue tohas come from major new designs or new product platforms that have been introduced in the preceding three years.

MtronPTI’s products are employed in numerous applications within the communications industry, including computer and telephone network switches, high-speed gigabit Ethernet, modems, wireless transmitters/receivers, multiplexers, data recovery/regeneration devices, fiber channel networks, repeaters, data transceivers, line interface devices, communications satellites, and base station controllers.  Its products are incorporated into end products that serve all elements of the communications industry.

The crystals, oscillators and filters intended for non-communications applications are found in military applications for remote sensing, personnel protection and armaments.  Avionics applications include ground and flight control systems.  Industrial applications are in security systems, metering systems, electronic test instruments and industrial control systems.  MtronPTI’s products are also used in medical instrumentation applications, as well as in various computer peripheral equipment such as storage devices, printers, modems, monitors, video cards and sound cards.

MtronPTI’s timing module, an electronic subsystem, is a pre-assembled circuit that integrates several different functions into a small, single, self-contained module for control of timing in a circuit.  Today, timingTiming modules are frequently used for the synchronization of timing signals in digital circuits, particularly in wireless and optical carrier network systems.

MtronPTI’s operations are located in Orlando, Florida, Yankton, South Dakota, and Noida, India.  In addition, MtronPTI also has a sales officeoffices in Hong Kong.Kong and Shanghai, China.  MtronPTI owns one building, approximately 71,000 square feet, on approximately seven acres of land in Orlando, Florida, which was acquired with the purchase of PTI.  MtronPTI owns a facility of approximately 28,000 square feet on approximately 11 acres of land and leases an approximately 16,000 square foot facility in Yankton, South Dakota.  MtronPTI leases approximately 13,000 square feet of office and manufacturing space in Noida, India, and approximately 1,500 square feet of office space in Hong Kong.Kong and approximately 1,200 square feet of office space in Shanghai, China.

MtronPTI has established long-term relationships with several contract manufacturers in Asia.  Approximately 10.9%15.9% of MtronPTI’s revenues in 20092010 were attributable to one such contract manufacturer located in both Korea and China.  MtronPTI maintains a rigorous quality control system and is an ISO 9001/2000 qualified manufacturer.  MtronPTI’s Hong Kong subsidiary (M-tron Industries, Limited)Ltd.) does not manufacture, but acts as a buying agent, regional warehouse, quality control and sales representative for its parent company.

At December 31, 2009, MtronPTI employed 60 engineers and technicians, primarily in Yankton, South Dakota and Orlando, Florida, who devote most of their time to research and development.  Research and development expense was approximately $1,636,000 and $2,149,000 in 2010 and $3,050,000 in 2009, and 2008, respectively.

The CompanyMtronPTI markets and sells its products through a variety of channels and agents. Nearly all of the Company’sMtronPTI’s products are sold into a specific design application at an OEM. Some of the products are sold directly to the OEM, some of the products are sold to an Electronic Manufacturing Services (“EMS”) company, which assembles them into final use products on behalf of the OEM and some are sold to aan electronics distributor who resells them to the OEM or EMS companies. The CompanyMtronPTI uses a combination of employees, external manufacturer representatives and electronics distributors to market and sell its products. An important part of the sales process is getting formal OEM confirmation of product suitability for use in a specific system design or a “design-win”.

MtronPTI markets and sells its frequency control devices primarily to:

In 2009,2010, MtronPTI’s largest customer, an electronics contract manufacturing company, accounted for approximately 8.0%11.9% of MtronPTI’s total revenues, compared to 7.0% forapproximately 8.5% in 2009.  MtronPTI’s largestsecond-largest customer in 2008.2010, which was also an electronics contract manufacturing company, accounted for approximately 10.1% of MtronPTI’s total revenues, compared to approximately 7.8% in 2009.  Revenues from MtronPTI’s 10 largest customers accounted for approximately 65.3% of revenues in 2010, compared to approximately 57.4% of revenues in 2009.  Three customers accounted for more than 10.0% of 2010 accounts receivable and no customers accounted for more than 10.0% of 2009 compared to approximately 47.0% of revenues for 2008.

MtronPTI’s business is not seasonal.

MtronPTI’s domestic revenues were $15,522,000$25,212,000 in 2009,2010, or 54.0% of total revenues, compared to $15,522,000, or 49.6% of total revenues, compared with $17,465,000, or 43.5% of total revenues in 2008.2009.

MtronPTI’s international revenues were $15,779,000$21,444,000 in 2009,2010, or 46.0% of total revenues, compared to $15,779,000, or 50.4% of total sales, compared to $22,714,000, or 56.5% of total sales for 2008.revenues, in 2009.  In each of 20092010 and 2008,2009, these revenues were mainly derived from customers in Malaysia and China, with additional significant sales in Canada, Thailand, Mexico, Singapore, France and Mexico.Canada.  MtronPTI avoids

See Part I, Item 1.A,1A, “Risk Factors,” “We have significant international operations and sales to customers outside of the United States that subject us to certain business, economic and political risks,” for a discussion of the risks attendant to our foreign operations.

At December 31, 2009,2010, MtronPTI’s order backlog was $13,958,000,$10,734,000, which was an increasea decrease of 70.6%23.1% compared to a backlog of $8,182,000$13,958,000 at December 31, 2008.  The growth in backlog is primarily due to increased repeat orders from existing customers, as well as orders received from new customers obtained through the Company’s ongoing efforts to expand within its target markets.2009.  The backlog of unfilled orders includes amounts based on signed contracts as well as agreed letters of intent, which we have determined are firm orders and likely to proceed.  Although backlog represents only businessfirm orders that isare considered likely to be fulfilled within the 12 months following receipt of the order, cancellations or scope adjustments may and do occur.

Backlog is adjusted quarterly to reflect project cancellations, deferrals, revised project scope and cost, and sales of subsidiaries, if any.  The Company expects to fill its entire 20092010 backlog in 2010,2011, but cannot provide assurances as to the portion of backlog to be fulfilled in a given year.

Most raw materials used in the production of MtronPTI products are available in adequate supply from a number of sources.  The prices of these raw materials are relatively stable.  However, some raw materials, including printed circuit boards, quartz, and certain metals including steel, aluminum, silver, gold, tantalum and palladium, are subject to greater supply fluctuations and price volatility as experienced over the past year in conjunction with the current economic slowdown.recent years.  The Company generally has been able to include some cost increases in its pricing, but revenues andin some cases margins have beenwere adversely impacted.

Frequency control devices are sold in a highly competitive industry.  There are numerous domestic and international manufacturers who are capable of providing custom designed quartz crystals, oscillators and electronic filters comparable in quality and performance to MtronPTI’s products.  Competitors include Vectron International (a divisionand K&L (divisions of Dover Corporation), CTS Corporation K&L (a division of Dover Corporation) and Saronix (a division of Pericom Semiconductor Corporation).  MtronPTI does not operate in the same markets as high volume manufacturers of standard products; rather it focuses on manufacturing lower volumes of more precise, custom designed frequency control devices.  Many of MtronPTI’s competitors and potential competitors have substantially greater financial, engineering, manufacturing and marketing resources than MtronPTI.  The markets in which MtronPTI participates are comprised of many small competitors, which suggests that there could be industry consolidation.

MtronPTI seeks to manufacture custom designed,custom-designed, high performance crystals and oscillators, which it believes it can sell competitively based upon performance, quality, order response time and a high level of engineering support.  MtronPTI believes that its main competitive advantage rests in its ability to bring to its customers new product designs as well as final manufactured products faster than its competitors, thus being more responsive to its customers’ supply chain requirements.

MtronPTI has no patents, trademarks or licenses that are considered to be importantsignificant to MtronPTI’s business or operations.  Rather, MtronPTI believes that its technological position depends primarily on the technical competence and creative ability of its engineering and technical staff in areas of product design and manufacturing processes, as well as proprietary know-how and information.

As of December 31, 2009,2010, the Company employed 218233 people (full-time equivalents): 2 within corporate headquarters and 216231 within its subsidiary, MtronPTI, which includes 8788 primarily in Yankton, South Dakota, 114121 primarily in Orlando, Florida, 811 in Hong Kong, and 78 in Noida, India.  TheIndia, and 3 in Shanghai, China.  In 2009, the Company reduced its headcount significantly in 2009 (from 275 at the beginning of the year to 218 at year end) as part of its restructuring plan to improve operational efficiency.  None of its employees is represented by a labor union and the Company considers its employee relations to be good.

The Company’s manufacturing operations, products, and/or product packaging are subject to environmental laws and regulations governing air emissions, wastewater discharges, and the handling, disposal and remediation of hazardous substances, wastes and other chemicals.  In addition, more stringent environmental regulations may be enacted in the future, both within the United States and internationally, and we cannot presently determine the modifications, if any, in the Company’s operations that any future regulations might require, or the cost of compliance that would be associated with these regulations.

The capital expenditures, earnings and competitive position of the Company have not been materially affected to date by compliance with current federal, state, and local laws and regulations (domestic and foreign) relating to the protection of the environment.  However, the Company cannot predict the effect of future laws and regulations.

Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount thereof may not be recoverable.  Management assesses the recoverability of the cost of the assets based on a review of projected undiscounted cash flows.  In the event an impairment loss is identified, it is recognized based on the amount by which the carrying value exceeds the estimated fair value of the long-lived asset.  Fair value is determined using pertinent market information, including appraisals, and/or projected undiscounteddiscounted cash flows.flow projections.

Risks Related to Our Business and Industry

We had a net loss of $2,522,000 for the year ended December 31, 2009, as well as losses in 2008 and 2007.  Although we had a net loss of $1,282,000income for the year ended December 31, 2008.  We2010, we are uncertain when or ifwhether we will generate sufficient revenues and sufficiently reduce expenses to return to profitability.

We are currently dedicated to manufacturing and marketing standard and custom designed highly engineered electronic components that are used primarily to control the frequency or timing of signals in electronic circuits, and we do not offer any other products.  As was the case in 2008,2009, virtually all of MtronPTI’s 20092010 revenues came from sales of frequency control devices, which consist of packaged quartz crystals, oscillator modules, electronic filters and electronic filters.integrated subsystems.  We expect that this product line will continue to account for substantially all of MtronPTI’s revenues for the foreseeable future.

Given our reliance on this single line of business, any decline in demand for this product line or failure to achieve continued market acceptance of existing and new versions of this product line may harm MtronPTI’s business and our financial condition.  Additionally, unfavorable market conditions affecting this line of business would likely have a disproportionate impact on us in comparison with certain competitors, who have more diversified operations and multiple lines of business.  Should this line of business fail to generate sufficient sales to support ongoing operations, there can be no assurance that we will be able to develop alternate business lines.

Our future growth and success will depend in large part upon our ability to recruit highly skilled technical personnel, including engineers, and to retain our existing management and technical personnel.  The labor markets in which we operate are highly competitive and some of our operations are not located in highly populated areas.  As a result, we may not be able to recruit and retain key personnel.  Our failure to hire, retain or adequately train key personnel could have a negative impact on our performance.

If single source components were to become unavailable on satisfactory terms, and MtronPTI could not obtain comparable replacement components from other sources in a timely manner, the Company’s business, results of operations and financial condition could be harmed.  On occasion, one or more of the components used in MtronPTI’s products have become unavailable, resulting in unanticipated redesign and related delays in shipments.  We cannot give assurance that similar delays will not occur in the future.  Our suppliers may be impacted by compliance with environmental regulations including Restriction of Hazardous Substances (“RoHS”) and Waste Electrical and Electronic Equipment (“WEEE”), which could disrupt the supply of components or cause additional costs for MtronPTI to implement new components into its manufacturing process.

When MtronPTI releases new products, or new versions of existing products, they may contain undetected or unresolved errors or defects.  The vast majority of MtronPTI’s products are custom-designed for requirements of specific OEM systems.  The expected business life of these products ranges from less than one year to more than 10 years depending on the application.  Some of the customizations are modest changes to existing product designs while others are major product redesigns or new product platforms.

Despite testing, errors or defects may be found in new products or upgrades after the commencement of commercial shipments.  Undetected errors and design flaws have occurred in the past and could occur in the future.  These errors could result in delays, loss of market acceptance and sales, diversion of development resources, damage to the Company’s reputation, legal action by its customers, failure to attract new customers and increased service costs.

There is a continuing trend among communications and network infrastructure equipment manufacturers to outsource the manufacturing of their equipment or components.  As a result, MtronPTI’s ability to persuade these OEMs to utilize its products in customer designs could be reduced and, in the absence of a manufacturer’s specification of MtronPTI’s products, the prices that MtronPTI can charge for them may be subject to greater competition.

The majority of MtronPTI’s sales are to companies that are many times its size.  This size differential may disadvantage MtronPTI in negotiating contractual terms.  These terms include price, payment terms, product warranties and product consignment obligations.

There is a growing trend among some of MtronPTI’s larger customers that MtronPTI provide increased levels of warranty coverage.  Some of these changes would require MtronPTI to pay substantial financial penalties if the customer invokes the warranty provision.  These additional warranties may result in additional production costs to MtronPTI.  In addition, these new warranty provisions may place MtronPTI at a disadvantage in comparison to its competitors and may result in terms that are not in the best interest of MtronPTI.

MtronPTI’s manufacturing operations, products, and/or product packaging are subject to environmental laws and regulations governing air emissions, wastewater discharges, and the handling, disposal and remediation of hazardous substances, wastes and other chemicals.  In addition, more stringent environmental regulations may be enacted in the future, and we cannot presently determine the modifications, if any, in MtronPTI’s operations that any future regulations might require, or the cost of compliance that would be associated with these regulations.

Environmental laws and regulations may cause us to change our manufacturing processes, redesign some of our products, and change components to eliminate some substances in MtronPTI’s products in order to be able to continue to offer them for sale.

Additionally, to date, very few of our international revenue and cost obligations have been denominated in foreign currencies.  As a result, changes in the value of the United States dollar relative to foreign currencies may affect our competitiveness in foreign markets.  We do not currently engage in foreign currency hedging activities, but may do so in the future to the extent that such obligations become more significant.we incur a significant amount of foreign-currency denominated liabilities.

Risks Related to Our Common Stock

SinceFrom January 1, 2009,2010 through March 23, 2011, the high and low bidsales prices for our common stock were $5.55$34.71 and $1.18, respectively, as of March 30, 2010.$3.29, respectively.  There is a limited public market for our common stock, and we cannot provide assurances that ana more active trading market will develop.  As a result of low trading volume in our common stock, the purchase or sale of a relatively small number of shares could result in significant share price fluctuations.

Additionally, the market price of our common stock may continue to fluctuate significantly in response to a number of factors, some of which are beyond our control, including the following:

Our officers, directors and principal10% stockholders control approximately 44%28.6% of the voting power represented by our outstanding shares of common stock as of March 30, 2010.23, 2011.  If these stockholders act together, they may be able to exert significant control over our management and affairs requiring stockholder approval, including approval of significant corporate transactions.  This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our common stock. This concentration of ownership may not be in the best interests of all of our stockholders.

Provisions in the Company’sour certificate of incorporation and by-laws, as well as provisions of the General Corporation Law of the State of Delaware (“DGCL”), may discourage, delay or prevent a merger, acquisition or other change in control of our company,the Company, even if such a change in control would be beneficial to our stockholders.  These provisions include the following:

Additionally, Section 203 of the DGCL prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.  We have not opted out of the restrictions under Section 203.203, as permitted under DGCL.

The Company’s principal executive offices are located in Orlando, Florida within an MtronPTI operating facility.   MtronPTI’s operations are located in Orlando, Florida, Yankton, South Dakota, and Noida, India.  MtronPTI also has a sales officeoffices in Hong Kong.Kong and Shanghai, China.

 

MtronPTI owns one building in Orlando, Florida, containing approximately 71,000 square feet, on approximately seven acres of land.  MtronPTI has two separate facilities in Yankton, South Dakota, which contain approximately 44,000 square feet in the aggregate.  One of these is owned, the other leased.  The Yankton, South Dakota manufacturing facility that is owned by MtronPTI contains approximately 28,000 square feet, is situated on approximately 11 acres of land and is subject to security deeds relating to loans.  The leased facility in Yankton, South Dakota contains approximately 16,000 square feet and is subject to a lease renewable annually on September 30.   The Company leases approximately 13,000 square feet of office and manufacturing space in Noida, India, and approximately 1,500 square feet of office space in Hong Kong.Kong and approximately 1,200 square feet of office space in Shanghai, China.  It is the Company’s opinion that the facilities referred to above are in good operating condition and suitable and adequate for present uses.

The Company also owns six buildings located in Bainbridge, Georgia that were formerly used in connection with the operations of Lynch Systems, a subsidiary of the Company whose operating assets were sold in 2007.  The Company is actively marketing these buildings for sale.

None.

PART II

Our common stock is traded on NYSE Amex, formerly known as the American Stock Exchange, under the symbol “LGL.” Based upon information furnished by our transfer agent, at March 30, 2010,23, 2011, we had approximately 664668 holders of record of our common stock.  The following table sets forth the high and low sales prices for our common stock for the periods indicated as reported by NYSE Amex:

The Board of Directors has adopted a policy of not paying cash dividends.  This policy takes into account theour long-term growth objectives, of the Company, especiallyincluding our anticipated investments in organic growth, its acquisition program, and stockholders’ desire for capital appreciation of their holdings and the current tax law disincentives for corporate dividend distributions.holdings.  In addition, the Company’s currentour credit agreements limit thefacility limits our subsidiaries’ ability to pay dividends and under such provisions, the Company currently cannot pay any dividends.payment of dividends, and advances and repayments of inter-company debt our subsidiaries are restricted.  Accordingly, no cash dividends have been paid since January 30, 1989, and none are expected to be paid for the foreseeable future.

The following table provides information as of December 31, 20092010 about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans (including individual arrangements):

None.

Consolidated Revenues and Gross Margin

In the year ended December 31, 2009,2010, consolidated revenues decreasedincreased by $8,878,000,$15,355,000, or 22.1%49.1%, to $46,656,000, from $31,301,000 in 2009.  The increase is primarily due to increased demand from $40,179,000existing customers for existing products in 2008.both our Telecom and Military, Instrumentation, Space and Avionics (“MISA”) market segments.  The decreaseincreased demand was due primarily to a generaldriven by growth in our customers’ businesses, expanded positions with those customers, new product offerings and improvement in economic slowdownconditions.  The revenue growth also resulted from the expansion of our product portfolio through the introduction of new lines of cavity filters and a corresponding decrease in demand forof double-oven oscillators, which entered production during the electronic components in which our products are used.first half of 2010.  Domestic sales decreasedrevenues increased by $1,943,000$9,690,000 or 11%62.4%, to $15,522,000$25,212,000 and foreign sales decreasedrevenues increased by $6,935,000,$5,665,000, or 30.5%35.9%, to $15,779,000,$21,444,000, as compared to 2008.2009.  The decrease in foreign sales was greater thanincrease in domestic sales because a greater portionrevenues was primarily the result of the sales declines were fromintroduction of new products for our MISA market segment.  Foreign revenues increased primarily due to the telecommunications market segment, which comprises a substantial portionincreased use of foreign sales.production facilities by the OEMs that are the end users of our products.  The Company is continuingcontinues its efforts to grow revenue by expanding into new geographic regionsAsia through the opening of a sales and customer service office in Shanghai, China, and into additional segments of the timing and frequency equipment market, such as alternative energy management, energy exploration, military personnel protection and homeland security.  This emphasis is expected to help the Company partially weather the recessionary impact on its current customers and revenue base by providing additional revenues from these target segments.

In the year ended December 31, 2009,2010, consolidated gross margin as a percentage of revenues decreasedincreased to 35.0% from 23.7% from 25.8% for 2008.2009. The reductionimprovement in gross margin is primarily attributabledue to higherthe increase in revenues compared to 2009, which increased gross margin by spreading fixed overhead asinfrastructure costs over a percentage of sales driven by the overall economic slowdownlarger revenue base, and the related decrease in revenues, as well as in part to higher materials and supply costs.

 

At December 31, 2009,2010, MtronPTI’s order backlog was $13,958,000,$10,734,000, which was an increasea decrease of 70.6%23.1% compared to a backlog of $8,182,000$13,958,000 at December 31, 2008.2009.  The growthdecline in backlog is primarily due to increaseda decrease in orders during the second half of 2010, which appears to be the result of reduced short-term demand in repeat orders due to excess inventory levels across the supply chain for the Telecom market segment and strong shipments from existing customers,our production facilities, and a return to a normalized backlog level compared to a significantly higher backlog as well as orders receivedof December 31, 2009, due to strong sales during the last six months of 2009 after a particularly weak period stemming from new customers obtained through the Company’s ongoing efforts to expand within its target markets.effects of the global economic crisis.  The backlog of unfilled orders includes amounts based on signed contracts as well as agreed letters of intent, whichother agreements we have determined are firm orderslegally binding and likely to proceed.  Although backlog represents only businessfirm orders that isare considered likely to be fulfilled within the 12 months following receipt of the order, cancellations or scope adjustments may and do occur.

Backlog is adjusted quarterly to reflect project cancellations, deferrals, revised project scope and cost, and sales of subsidiaries, if any.  The Company expects to fill its entire 20092010 backlog in 2010,2011, but cannot provide assurances as to the portion of backlog to be fulfilled in a given year.

Sale of Select Assets and Liabilities of Subsidiary and Discontinued Operations

In June 2007, the Company finalized its sale of certain assets and liabilities of Lynch Systems to a third party.  The assets sold included certain accounts receivable, inventories, machinery and equipment. The Buyer also assumed certain liabilities of Lynch Systems, including accounts payable, customer deposits and accrued warranties.  The result of the sale transaction was a loss of $982,000. Lynch Systems retained certain assets including the land, buildings and some equipment used in its operations and certain accounts receivable balances. The Company intends to sell the land, buildings and remaining equipment, which are classified as held and used.for sale. The Company recognized an impairment loss for the remaining assets of Lynch Systems as part of its operations of $20,000 in 2010 and $235,000 in 2009.  There was no impairment in 2008.

The operations of Lynch Systems were discontinued in 2007.  There were no revenues generated by the operations of Lynch Systems in 2009 or 2008, and the loss was $0 for 2009 and $24,000 for 2008.

The Company’s cash and cash equivalents, and investments in marketable securities at December 31, 20092010 totaled $3,843,000, a decrease$4,182,000, an increase of $1,496,000$339,000 compared to $5,339,000$3,843,000 at December 31, 2008.2009.  Specifically, cash and cash equivalents decreasedincreased by $1,509,000,$331,000, from $5,325,000 at December 31, 2008 to $3,816,000 at December 31, 2009.2009 to $4,147,000 at December 31, 2010.

Cash provided by operating activities was $5,503,000 in 2010, compared to $637,000 in 2009, compared to $943,000 of cash used in operating activities in 2008.2009.  The increase in operating cash flow of $1,580,000$4,866,000 was due to the increase in net income which was offset by the net increase in accounts receivable of ($1,003,000), an increase in inventory of ($599,000), a decreasedeferred tax benefit of ($3,276,000), an increase in accounts payable, accrued compensation and commissions expense and accrued expenses of ($106,000), and an impairment loss on Lynch System’s assets of $20,000 in 2010, compared to the net collection of accounts receivable of $1,704,000, an increase in accounts payable, accrued compensation and commissions expense and accrued liabilitiesexpenses of $329,000,$290,000 and an impairment loss on Lynch System’s assets of $235,000 in 2009, compared to an increase in accounts receivable of $101,000, a decrease in accounts payable and accrued liabilities of $575,000 and $0 of impairment loss in 2008.2009.

Cash used in investing activities was $767,000 during 2010 compared to $325,000 used during 2009, compared to $282,000 used during 2008, which was primarily driven by the Company’s investment in capital equipment.equipment and software.

Cash used in financing activities was $1,821,000$4,405,000 during 2009,2010, as a result of repayments onof notes payable to banks of $1,053,000$1,696,000 and repayments of long-term debt of $768,000.$2,620,000, including retirement of the RBC term loan on September 30, 2010 and principal payments on the Company’s term loan with FNBO.  Cash provided byused in financing activities in 20082009 was $1,317,000,$1,821,000, resulting from $1,714,000$1,053,000 of borrowingsrepayments against MtronPTI’s short-term credit facility offset by $397,000and $768,000 of note repayments made on its outstanding long-term debt agreements.

At December 31, 2009,2010, the Company’s consolidated working capital was $5,466,000,$12,829,000, compared to $9,970,000$5,466,000 at December 31, 2008.2009.  At December 31, 2010, the Company had consolidated current assets of $17,488,000, consolidated current liabilities of $4,659,000 and a ratio of consolidated current assets to consolidated current liabilities of 3.75 to 1.00.  At December 31, 2009, the Company had consolidated current assets of $14,355,000, consolidated current liabilities of $8,889,000 and a ratio of consolidated current assets to consolidated current liabilities of 1.61 to 1.00.  At December 31, 2008, the Company had consolidated current assets of $17,630,000, consolidated current liabilities of $7,660,000 and a current ratio of 2.30 to 1.00.  The decreaseincrease in consolidated working capital is primarily driven by the re-classificationresult of an increase in the term loan with RBC Bank (“RBC”)deferred tax asset of $2,341,000$1,295,000, an increase of $1,003,000 in accounts receivable and an increase of $599,000 in inventory, and a combined decrease in accounts payable, accrued compensation, commissions expense, and other accrued expenses of $106,000 as of December 31, 2009 to a current liability due to its scheduled maturity on October 1, 2010 as well as repayments of long-term debt totaling $768,000 for 2009, and an increase in accounts payable of $240,000 as of December 31, 2009 compared to December 31, 2008, which is due to increased materials purchases related to increased production and shipments during the fourth quarter of 2009.

Note payable to the bank decreased $1,053,000$1,696,000 to $0 at December 31, 2010, compared to $1,696,000 at December 31, 2009, compared2009.  The decrease is primarily due to $2,749,000the repayment of all amounts previously outstanding under the First National Bank of Omaha (“FNBO”) Revolving Loan of $4,000,000 at December 31, 2008.  The decrease is due to repayments made against MtronPTI’s short-term credit facility, which were required to remedy certain covenant requirements for the quarters ended June 30, 2009 and September 30, 2009.2010.  Total long-term debt (including both the current and long-term portions) was $3,289,000$669,000 at December 31, 2009,2010, a decrease of $768,000$2,620,000 as compared to the balance at December 31, 20082009 of $4,057,000.$3,289,000.  The decrease wasis primarily due to a one-timethe repayment on September 30, 2010 of the remaining $2,282,000 principal paymentand interest due under the Company’s term loan with RBC and termination of $400,000 made to remedy certain covenant requirements, as well as scheduled principal payments totaling $301,000.the related loan agreement with RBC.

 

On October 14, 2004, MtronPTI entered into a loan agreement with First National Bank of Omaha (“FNBO”)FNBO, which was amended and restated on August 18, 2009July 30, 2010 (the “FNBO Loan Agreement”).  The FNBO Loan Agreement

The FNBO Loan Agreement also providedprovides for a term loan in the original principal amount of $2,000,000 (the “FNBO Term Loan”).  At December 31, 2009,2010, the principal amountbalance of the FNBO Term Loan was approximately $948,000, and the principal balance bears$669,000, bearing interest at 30-day LIBOR plus 2.10%, with payments of approximately $22,000$24,000 due monthly and all remaining principal and interest due January 24, 2013.

All outstanding obligations under the FNBO Loan Agreement are collateralized by a first priority security interest in all of the assets of MtronPTI (including general intangibles, but excluding real estate), and are guaranteed by the Company.

The FNBO Loan Agreement contains a variety of affirmative and negative covenants, including, but not limited to, financial covenants that MtronPTI maintain: (i) tangible net worth of not less than $5,500,000, (ii) a ratio of current assets to current liabilities of not less than 1.50 to 1.00; (iii) a ratio of total liabilities to tangible net worth of not greater than 2.75 to 1.00; and (iv) a fixed charge coverage ratio of not less than 1.201.25 to 1.00.  MtronPTI isThe FNBO Loan Agreement also barred from makingplaces certain limitations on MtronPTI’s ability to make certain payments to the Company, including but not limited to payments of dividends, advances and repayment of inter-company debt, interest payments on inter-company debt and management fees.

On September 30, 2005, MtronPTI entered into a loan agreement with RBC, which was subsequently modified on September 17, 2009 (the “RBC Loan Agreement”).  The RBC Loan Agreement providesprovided for a loan in the original principal amount of $3,040,000 (the “RBC Term Loan”).  The RBC Term Loan bears which bore interest at LIBOR Base Rate plus 2.75% and is beingwas repaid in monthly installments based on a 20-year amortization schedule, withschedule.  On September 30, 2010, the thenCompany repaid the remaining $2,282,000 of principal balance and interest due on October 1, 2010.

In connection with the RBC Term Loan, MtronPTI entered into a five-year interest rate swap from which it receives periodic payments at the LIBOR Base Rate and makes periodic payments at a fixed rate of 7.51% with monthly settlement and rate reset dates.  The Company has designated this swap as a cash flow hedge.hedge in accordance with ASC 815.  The fair value of the interest rate swap was ($97,000) at December 31, 2009, and ($182,000) at December 31, 2008, net of any tax effect, and is included in “other accrued expenses” on the condensed consolidated balance sheet.  Thesheets.  Any change in fair value ishas been reflected in accumulated other comprehensive loss,income (loss), net of any tax effect.

Aggregate principal maturities of long-term debt for each of the next fiveremaining years until maturity based upon payment terms and interest rates in effect at December 31, 20092010 are as follows (in thousands):

The Board of Directors has adopted a policy of not paying cash dividends.  This policy takes into account the long-term growth objectives of the Company, including its anticipated investments for organic growth, its acquisition program, and stockholders’ desire for capital appreciation of their holdings and the current tax law disincentives for corporate dividend distributions.holdings.  In addition, paymentthe Company’s credit facility places certain limitations on MtronPTI’s ability to make certain payments to the Company, including but not limited to payments of dividends, and advances and repaymentsrepayment of inter-company debt, by the Company’s subsidiaries are restricted by MtronPTI’s credit agreements.  Accordingly, nointerest payments on inter-company debt and management fees.  No cash dividends have been paid since January 30, 1989, and none are expected to be paid for the foreseeable future.

The Company’s significant accounting policies are described in Note A to the Consolidated Financial Statements.  The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.  The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  On an on-goingongoing basis, the Company evaluates its estimates, including those related to the carrying value of inventories, the likelihood of collecting its outstanding accounts receivable, value of stock based compensation, and the provision for income taxes.  The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  In the past, actual results have not been materially different from the Company’s estimates.  However, results may differ from these estimates under different assumptions or conditions.

The Company has identified the following as critical accounting policies, based on the significant judgments and estimates used in determining the amounts reported in its consolidated financial statements:

Accounts Receivable

Accounts receivable on a consolidated basis consist principally of amounts due from both domestic and foreign customers.  Credit is extended based on an evaluation of the customer’s financial condition and collateral is not generally required.  MtronPTI has credit sales to industries that are subject to cyclical economic changes.  The Company maintains an allowance for doubtful accounts at a level that management believes is sufficient to cover potential credit losses.

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of our clientscustomers to make required payments.  We base our estimates on our historical collection experience, current trends, credit policy and relationship of our accounts receivable and revenues.  In determining these estimates, we examine historical write-offs of our receivables and review each customer’s account to identify any specific customer collection issues.  If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payment, additional allowances may be required.  Our failure to estimate accurately the losses for doubtful accounts and ensure that payments are received on a timely basis could have a material adverse effect on our business, financial condition, and results of operations.

Inventory Valuation

Inventories are stated at the lower of cost or market value using the FIFO method (first-in, first-out). method.

The Company maintains a reserve for inventory based on estimated losses that result from inventory that becomes obsolete as of period end.  In 2009,determining these estimates, the Company elected to change its methodperforms an analysis of valuing itsdemand and usage for each inventory toitem over historical time periods.  Based on that analysis, the FIFO method, whereas in all prior yearsCompany reserves a portion of inventory was valued using the LIFO method.  For the year ended December 31, 2008, approximately 34% of inventory was valued using the LIFO method.  The new method of accounting for inventories was adopted because FIFO is used by substantially allpercentage of the Company’s competitors.  Comparative financial statementsinventory amount within each time period based on historical demand and usage patterns of prior years have been adjusted to apply the new method retrospectively.specific items in inventory.

Revenue Recognition

Income Taxes

The carrying value of the Company’s net deferred tax assets at December 31, 2010 and 2009 were $3,350,000 and 2008 is $111,000.  This is equal to the amount of the Company’s carry-forward alternative minimum tax at such dates.$111,000, respectively.

The calculation of tax assets and liabilities involves dealing with uncertainties in the application of complex tax regulations in several different tax jurisdictions.  The Company evaluates the exposure associated with the various filing positions and records estimated reserves for tax positions that do not meet the “more likely than not” recognition threshold as defined by ASC 740.

Stock-Based Compensation

The Company estimates the fair value of stock-based compensation on the grant date using the Black-Scholes-Merton option-pricing model. The Black-Scholes-Merton option-pricing model requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values.  There is no expected dividend rate.  Historical Company information was the primary basis for the expected volatility assumption.  Grants from prior year were calculated using historical volatility as the Company believes

The Company does not have any off-balance sheet arrangements.

Not applicable.

Our consolidatedSee the financial statements andincluded at the related notes to the consolidated financial statements called for by this item appear under Item 14end of this annual report beginning on Form 10-K.page 41.

None.

Item 9A(T).9A.  Controls and Procedures.

As of the end of the period covered by this report, the Company’s principal executive officer and principal financial officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).  Based on their evaluation of the Company’s disclosure controls and procedures, the Company’s principal executive officer and principal financial officer, with the participation of the Company’s management, have concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2009,2010 to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) accumulated and communicated to management, including the Company’s principal executive officer and principal financial officer, as appropriate to allow for timely decisions regarding required disclosure.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).  Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 20092010 based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2009.

There were no changes in the Company’s internal controls over financial reporting during our fourth quarter ended December 31, 2009,2010, or in other factors that could significantly affect these controls, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Not applicable.

PART III

The following table sets forth information regarding the members of ourthe Board, of Directors, including their business experience for the past five years (and, in some instances, for prior years) and their specific experience, qualifications, attributes or skills that led to the conclusion that they should serves as directors.

The following table sets forth information regarding our executive officers, including their business experience for the past five years and prior years.

There are no family relationships among our executive officers and directors.

Section 16(a) of the Securities and Exchange Act of 1934, as amended, requires the Company's directors, executive officers and holders of more than 10% of the Company's Common Stockcommon stock to file with the SEC and NYSE Amex initial reports of ownership and reports of changes in the ownership of Common Stockcommon stock and other equity securities of the Company.  Such persons are required to furnish the Company with copies of all Section 16(a) filings.

Based solely upon a review of the copies of the forms furnished to the Company, the Company believes that its directors, officers and directorsholders of more than 10% of the Company's common stock complied with all applicable filing requirements during the 20092010 fiscal year except as set forth below:

On March 30,April 8, 2010, Hans WunderlR. LaDuane Clifton filed an Initial Statement of Beneficial Ownership of Securities on Form 3 in connection with his appointment as the Company’s Chief OperatingAccounting Officer on February 3, 2009.March 24, 2010.

On March 29,April 8, 2010, Greg Anderson filed an Initial Statement of Beneficial Ownership of Securities on Form 3 in connection with his appointment as the Company’s Chief Executive Officer on July 2, 2009.

On December 21, 2010, each of Gregory P. Anderson, R. LaDuane Clifton, Michael Chiu, Timothy Foufas, Paul D. Kaminski, Marc Gabelli, Patrick J. Guarino, Hans Wunderl and Robert S. Zuccaro filed a Statement of Changes in Beneficial Ownership of Securities covering a grant by the Company of restricted shares of its common stock that was made to each of them on December 15, 2009, and Javier Romero filed a Form 5 in connection with the same director grant on March 30, 2010.

The Audit Committee of the Board of Directors (the “Audit Committee”) consists of Messrs. Pustorino,Chiu, Foufas, Guarino and Guarino.Kaminski.  The Board of Directors has determined that all Audit Committee members are financially literate and independent under applicable NYSE Amex current listing standards.  Mr. PustorinoKaminski serves as Chairman of ourthe Audit Committee, and the Board of Directors has determined that he qualifies as the Audit Committee financial expert, as defined under the Exchange Act.

The following table sets forth information with respect to compensation earned by the named executive officers:

Gregory P. Anderson

Effective July 2, 2009, the Company entered into an Employment Agreement with Mr. Anderson (the “Anderson Employment Agreement”).  Pursuant to the Anderson Employment Agreement, Mr. Anderson is employed as the Company’s President and Chief Executive Officer on an “at will” basis and receives an annual base salary of $170,000.  Subject to Mr. Anderson and the Company’s meeting certain performance targets, Mr. Anderson is also eligible for (i) an annual bonus of up to 40% of his annual base salary, paid 50% in cash and 50% in restricted shares of the Company’s common stock, and (ii) a one-time cash bonus payment in recognition of his performance in 2009, in an amount determined by the Board of Directors

There were no unexercised options, stock that had not vested orThe following table sets forth information regarding equity incentive plan awards for anyheld by named executive officer outstandingofficers as of the end of the fiscal year ended December 31, 2009.2010:

DIRECTOR COMPENSATION

The following table sets forth information with respect to compensation earned by or awarded to each Director of the Company who is not a named executive officer and who served on the Board of Directors during the fiscal year ended December 31, 2009:2010:

 

A director who is an employee of the Company is not compensated for services as a member of the Board of Directors or any committee thereof.  None of the Company’s directors is an employee of the Company.  In 2009,2010, directors who were not employees received (i) a retainer of $5,000 ($2,500 in cash and $2,500 in restricted stock whose value was based on trading price at date of grant) per quarter; (ii) a fee of $1,000 for each meeting of the Board of Directors attended in person or telephonically that had a duration of at least one hour; and (iii) a fee of $750 for each Audit Committee, Compensation Committee, and Nominating Committee meeting attended in person or telephonically that had a duration of at least one hour; and (iv) a fee of $750 for each Compensation Committee, Audit Committee or Nominating Committee meeting attended in person.hour.  The Audit Committee Chairman received an additional $3,000 annual cash retainer, the Nominating Committee Chairman received an additional $1,000 annual cash retainer and the Compensation Committee Chairman received an additional $2,000 annual retainer.  The Chairman of the Board of Directors, was entitled to receive a $100,000 annual fee, payable in equal quarterly installments, but Mr. Gabelli elected to reduce his fees for service as a director and Chairman of the feeBoard to $1 for 2009.2010.

For fiscalOn December 15, 2009, as 50% of their base compensation, all Directors,the Company’s then-current directors, except for the Chairman of the Board, of Directors, received grants of 3,165 shares of restricted common stock in an amountas 50% of $10,000 (the numbertheir base compensation for fiscal 2010 ($10,000), and on March 24, 2010, one newly appointed director received a grant of such2,469 shares of restricted common stock under a similar arrangement, as determined by dividing $10,000 bybased on the closing price of the Company’s common stock on the grant date), suchdate.  Such shares vestingwere granted under the 2001 Equity Incentive Plan, vested ratably at the end of each quarterly period during fiscal 2010.  Once vested, such shares2010, and will not be transferable until the earliest to occur of the Director’sdirector’s resignation from the Board of Directors or any other termination of the Director’sdirector’s membership thereon, or a change of control, as defined in the 2001 Equity Incentive Plan.  Pursuant

Arrangements for the compensation for directors has not changed from 2010 to this arrangement, on December 15, 2009, members2011, except that (i) Mr. Gabelli has informed the Company that he does not intend to waive or reduce his $100,000 annual fee for serving as Chairman of the Board, his annual retainer as a director or his fees for attending the Board meetings to be held during 2011, and (ii) Dr. Chiu, as Chairman of Directors other than the Board’s Strategic Planning Committee, which was formed to advise and assist the Company’s management in its pursuit of certain strategic opportunities through the end of the second quarter of 2011, will receive a fee of $20,000 per quarter for his duties as Chairman were granted 3,165of the Strategic Planning Committee.

On December 15, 2010, the Company’s then-current directors received grants of 529 shares of restricted common stock  under the Company’s 2001 Equity Incentive Plan to serve as a part50% of their basedbase compensation for 2010. Pursuantfiscal 2011 ($10,000), except for Mr. Kaminski, who elected to receive a similar arrangement for fiscal 2009, on December 17, 2008, eight membersgrant of the Board of Directors were granted 5,5551,058 shares each of restricted common stock under the Company’s 2001 Equity Incentive Plan (theas 100% of his base compensation for fiscal 2011 ($20,000).  The number of such shares granted to each director was determined by dividing $10,000the dollar amount of base compensation paid in the form of the share grant by the closing price of the Company’s common stock on the grant date).date.  Such shares were granted under the 2001 Equity Incentive Plan, vested immediately on the grant date, and are transferable only if a director maintains a minimum ownership level of 1,000 shares of the Company’s common stock.

The following table sets forth information regarding the number of shares of our common stock beneficially owned on March 30, 2010,23, 2011, by:

See Part II, Item 4, “Equity Compensation Plan Information,” for information regarding the Company’s equity compensation plans.

As required under NYSE Amex rules, a majority of the members of a listed company’s Board of Directors must qualify as “independent,” as affirmatively determined by thesuch Board of Directors.  The Board of Directors of the Company has determined that all of the Directors,Company’s directors, other than Messrs, HealyMessrs. Gabelli, Wunderl and Wunderl,Zuccaro, are independent within the meaning of NYSE Amex rules.

Audit Fees

The aggregate audit fees billed for the fiscal years ended December 31, 20092010 and 20082009 by J.H. Cohn LLP, the Company’s independent registered public accounting firm, totaled $297,000$296,000 and $315,000,$297,000, respectively.  Audit fees include services relating to auditing the Company’s annual financial statements, reviewing the Company’s financial statements included in the Company’s filingsquarterly reports on Form 10-Q, comfort letter procedures related to certain financing arrangements, and certain accounting consultations.the review of registration statements.

Audit-Related Fees

J.H. Cohn LLP did not render any audit-related services during 20092010 or 2008.2009.

Tax Fees

J.H. Cohn LLP did not render any tax services during 20092010 or 2008.2009.

All Other Fees

J.H. Cohn LLP did not render any other services during 20092010 or 2008.2009.

Pre-Approval Policies and Procedures

The Audit Committee policy and procedures for the pre-approval of audit and non-audit services rendered by our independent auditorsregistered public accounting firm are reflected in the Audit Committee Charter.  The Audit Committee Charter provides that the Audit Committee shall pre-approve all audit and non-audit services provided by the independent auditorsregistered public accounting firm and shall not engage the independent auditorsregistered public accounting firm to perform the specific non-audit services proscribed by law or regulation.  The Audit Committee may delegate pre-approval authority to a member of the Audit Committee.  The decisions of any Audit Committee member to whom pre-approval authority is delegated must be presented to the full Audit Committee at its next scheduled meeting.

All services performed by our independent auditorsregistered public accounting firm were pre-approved by the Audit Committee.

PART IV

Item 15.  Exhibits and Financial Statement Schedules

The exhibits listed above have been filed separately with the Securities and Exchange Commission in conjunction with this Annual Report on Form 10-K or have been incorporated by reference into this Annual Report on Form 10-K.  Upon request, the Company will furnish to each of its stockholders a copy of any such exhibit.  Requests should be addressed to the Office of the Secretary, The LGL Group, Inc., 2525 Shader Rd. Orlando, Florida 32804.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The LGL Group, Inc.

(Dollars In Thousands)

 

(Dollars In Thousands, Except Per Share Amounts)