UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ | |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2017
OR
☐ | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from ____________ to ____________
Commission File No. 1-106001- 00106
THE LGL GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 38-1799862 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
2525 Shader Rd., Orlando, Florida | 32804 |
(Address of principal executive offices) | (Zip Code) |
(407) 298-2000
(Registrant’s telephone number, including area code)
(Former name, former address, and former fiscal year if changed since last report)
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.
Yes ☒ No ☐
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).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer,” “smaller reporting company” and "smaller reporting company"“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | (Do not check if a smaller reporting company) | Smaller reporting company | ☒ | |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer'sissuer’s classes of common stock, as of the latest practicable date.
Class | Outstanding at May | |
Common Stock, $0.01 par value per share | 2,675,466 |
PART I. | ||
Item 1. | ||
1 | ||
– As of March 31, | ||
– As of December 31, | ||
2 | ||
– Three months ended March 31, | ||
Condensed Consolidated Statements of Comprehensive | 3 | |
– Three months ended March 31, | ||
Condensed Consolidated Statement of | 4 | |
– Three months ended March 31, | ||
5 | ||
– Three months ended March 31, | ||
6 | ||
Item 2. | ||
| Results of Operations | 12 | |
Item 3. | 15 | |
Item 4. | 15 | |
PART II. | ||
Item 1. | 16 | |
Item 1A. | 16 | |
Item 2. | 16 | |
Item 3. | 16 | |
Item 4. | 16 | |
Item | 16 | |
Item 6. | 16 | |
18 | ||
THE LGL GROUP, INC.
(Dollars in Thousands)Thousands, Except Per Share Amounts)
|
| March 31, 2017 |
|
| December 31, 2016 |
| ||
|
| (Unaudited) |
|
| (Audited) |
| ||
ASSETS |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 1,989 |
|
| $ | 2,778 |
|
Marketable securities |
|
| 3,793 |
|
|
| 2,770 |
|
Accounts receivable, net of allowances of $29 and $31, respectively |
|
| 3,186 |
|
|
| 3,504 |
|
Inventories, net |
|
| 4,050 |
|
|
| 3,638 |
|
Prepaid expenses and other current assets |
|
| 294 |
|
|
| 200 |
|
Total Current Assets |
|
| 13,312 |
|
|
| 12,890 |
|
Property, Plant and Equipment: |
|
|
|
|
|
|
|
|
Land |
|
| 633 |
|
|
| 633 |
|
Buildings and improvements |
|
| 3,966 |
|
|
| 3,966 |
|
Machinery and equipment |
|
| 16,854 |
|
|
| 16,849 |
|
Gross property, plant and equipment |
|
| 21,453 |
|
|
| 21,448 |
|
Less: accumulated depreciation |
|
| (18,904 | ) |
|
| (18,737 | ) |
Net property, plant, and equipment |
|
| 2,549 |
|
|
| 2,711 |
|
Intangible assets, net |
|
| 609 |
|
|
| 628 |
|
Deferred income taxes, net |
|
| 221 |
|
|
| 214 |
|
Other assets, net |
|
| 204 |
|
|
| 203 |
|
Total Assets |
| $ | 16,895 |
|
| $ | 16,646 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 1,511 |
|
| $ | 1,525 |
|
Accrued compensation and commissions expense |
|
| 1,002 |
|
|
| 942 |
|
Other accrued expenses |
|
| 352 |
|
|
| 288 |
|
Total Current Liabilities |
|
| 2,865 |
|
|
| 2,755 |
|
Commitments and Contingencies (Note L) |
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
|
Common stock, $0.01 par value - 10,000,000 shares authorized; 2,757,050 shares issued and 2,675,466 shares outstanding at March 31, 2017 and December 31, 2016 |
|
| 27 |
|
|
| 27 |
|
Additional paid-in capital |
|
| 29,180 |
|
|
| 29,173 |
|
Accumulated deficit |
|
| (14,615 | ) |
|
| (14,726 | ) |
Treasury stock, 81,584 shares held in treasury at cost at March 31, 2017 and December 31, 2016 |
|
| (580 | ) |
|
| (580 | ) |
Accumulated other comprehensive income (loss) |
|
| 18 |
|
|
| (3 | ) |
Total Stockholders' Equity |
|
| 14,030 |
|
|
| 13,891 |
|
Total Liabilities and Stockholders' Equity |
| $ | 16,895 |
|
| $ | 16,646 |
|
| March 31, 2016 | December 31, 2015 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 5,576 | $ | 5,553 | ||||
| Accounts receivable, less allowance of $34 at March 31, 2016 and December 31, 2015 | 2,544 | 2,606 | ||||||
| Inventories, net (Note C) | 3,550 | 3,546 | ||||||
| Prepaid expenses and other current assets | 359 | 247 | ||||||
| Total Current Assets | 12,029 | 11,952 | ||||||
| Property, Plant and Equipment: | ||||||||
| Land | 633 | 633 | ||||||
| Buildings and improvements | 3,938 | 3,938 | ||||||
| Machinery and equipment | 16,681 | 16,633 | ||||||
| Gross property, plant and equipment | 21,252 | 21,204 | ||||||
| Less: accumulated depreciation | (18,229 | ) | (18,039 | ) | ||||
| Net property, plant, and equipment | 3,023 | 3,165 | ||||||
| Intangible assets, net (Note D) | 461 | 475 | ||||||
| Other assets, net | 208 | 211 | ||||||
| Total Assets | $ | 15,721 | $ | 15,803 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 1,104 | $ | 987 | ||||
| Accrued compensation and commissions expense | 721 | 769 | ||||||
| Accrued warranty expense | 105 | 126 | ||||||
| Other accrued expenses | 209 | 194 | ||||||
| Total Current Liabilities | $ | 2,139 | 2,076 | |||||
| Commitments and Contingencies (Note J) | ||||||||
| Stockholders' Equity | ||||||||
| Common stock, $0.01 par value - 10,000,000 shares authorized; 2,745,098 shares issued and 2,665,434 shares outstanding at March 31, 2016 and December 31, 2015 | 27 | 27 | ||||||
| Additional paid-in capital | 29,090 | 29,106 | ||||||
| Accumulated deficit | (15,000 | ) | (14,874 | ) | ||||
| Treasury stock: 79,664 shares held in treasury at cost at March 31, 2016 and December 31, 2015 | (572 | ) | (572 | ) | ||||
| Accumulated other comprehensive income | 37 | 40 | ||||||
| Total Stockholders' Equity | 13,582 | 13,727 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 15,721 | $ | 15,803 | ||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
(Dollars in Thousands, Except Per Share Amounts)
|
| Three Months Ended March 31, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
REVENUES |
| $ | 5,624 |
|
| $ | 4,756 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Manufacturing cost of sales |
|
| 3,558 |
|
|
| 3,257 |
|
Engineering, selling and administrative |
|
| 1,958 |
|
|
| 1,661 |
|
OPERATING INCOME (LOSS) |
|
| 108 |
|
|
| (162 | ) |
Other Income (Expense): |
|
|
|
|
|
|
|
|
Interest expense, net |
|
| (6 | ) |
|
| (6 | ) |
Other income, net |
|
| 12 |
|
|
| 42 |
|
Total Other Income (Expense) |
|
| 6 |
|
|
| 36 |
|
INCOME (LOSS) BEFORE INCOME TAXES |
|
| 114 |
|
|
| (126 | ) |
Income tax provision |
|
| (3 | ) |
|
| — |
|
NET INCOME (LOSS) |
| $ | 111 |
|
| $ | (126 | ) |
|
|
|
|
|
|
|
|
|
Basic per share information: |
|
|
|
|
|
|
|
|
Weighted average shares ourstanding |
|
| 2,675,466 |
|
|
| 2,665,434 |
|
Net income (loss) |
| $ | 0.04 |
|
| $ | (0.05 | ) |
|
|
|
|
|
|
|
|
|
Diluted per share information: |
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
| 2,688,484 |
|
|
| 2,665,434 |
|
Net income (loss) |
| $ | 0.04 |
|
| $ | (0.05 | ) |
Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| REVENUES | $ | 4,756 | $ | 5,404 | ||||
| Cost and Expenses: | ||||||||
| Manufacturing cost of sales | 3,257 | 3,605 | ||||||
| Engineering, selling and administrative | 1,661 | 1,960 | ||||||
| OPERATING LOSS | (162 | ) | (161 | ) | ||||
| Other Income (Expense): | ||||||||
| Interest expense, net | (6 | ) | (5 | ) | ||||
| Other income (expense), net | 42 | (12 | ) | |||||
| Total Other Income (Expense) | 36 | (17 | ) | |||||
| LOSS BEFORE INCOME TAXES | (126 | ) | (178 | ) | ||||
| Income tax provision | — | — | ||||||
| NET LOSS | $ | (126 | ) | $ | (178 | ) | ||
| Weighted average number of shares used in basic and diluted net loss per common share calculation | 2,665,434 | 2,616,485 | ||||||
| BASIC AND DILUTED NET LOSS PER COMMON SHARE | $ | (0.05 | ) | $ | (0.07 | ) | ||
See Accompanying Notes to Condensed Consolidated Financial Statements.
(Dollars in Thousands)
|
| Three Months Ended March 31, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
NET INCOME (LOSS) |
| $ | 111 |
|
| $ | (126 | ) |
Other Comprehensive Income (Loss): |
|
|
|
|
|
|
|
|
Unrealized gain (loss) on available-for-sale securities, net of taxes |
|
| 21 |
|
|
| (3 | ) |
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) |
|
| 21 |
|
|
| (3 | ) |
COMPREHENSIVE INCOME (LOSS) |
| $ | 132 |
|
| $ | (129 | ) |
Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| NET LOSS | $ | (126 | ) | $ | (178 | ) | ||
| Other Comprehensive (Loss) Income: | ||||||||
| Unrealized (loss) gain on available-for-sale securities, net of taxes | (3 | ) | 13 | |||||
| TOTAL OTHER COMPREHENSIVE (LOSS) INCOME | (3 | ) | 13 | |||||
| COMPREHENSIVE LOSS | $ | (129 | ) | $ | (165 | ) | ||
See Accompanying Notes to Condensed Consolidated Financial Statements.
(Dollars in Thousands)
|
| Shares of Common Stock Outstanding |
|
| Common Stock |
|
| Additional Paid-In Capital |
|
| Accumulated Deficit |
|
| Treasury Stock |
|
| Accumulated Other Comprehensive (Loss) Income |
|
| Total |
| |||||||
Balance at December 31, 2016 |
|
| 2,675,466 |
|
|
| 27 |
|
|
| 29,173 |
|
|
| (14,726 | ) |
|
| (580 | ) |
|
| (3 | ) |
|
| 13,891 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 111 |
|
|
|
|
|
| — |
|
|
| 111 |
| |
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 21 |
|
|
| 21 |
|
Stock-based compensation |
|
| — |
|
|
| — |
|
|
| 7 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 7 |
|
Balance at March 31, 2017 |
|
| 2,675,466 |
|
| $ | 27 |
|
| $ | 29,180 |
|
| $ | (14,615 | ) |
| $ | (580 | ) |
| $ | 18 |
|
| $ | 14,030 |
|
| Shares of Common Stock Outstanding | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Accumulated Other Comprehensive Income | Total | ||||||||||||||||||||||
| Balance at December 31, 2015 | 2,665,434 | $ | 27 | $ | 29,106 | $ | (14,874 | ) | $ | (572 | ) | $ | 40 | $ | 13,727 | |||||||||||||
| Net loss | — | — | — | (126 | ) | — | — | (126 | ) | |||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | (3 | ) | (3 | ) | |||||||||||||||||||
| Stock-based compensation | — | — | (16 | ) | — | — | — | (16 | ) | |||||||||||||||||||
| Balance at March 31, 2016 | 2,665,434 | $ | 27 | $ | 29,090 | $ | (15,000 | ) | $ | (572 | ) | $ | 37 | $ | 13,582 | |||||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
(Dollars in Thousands)
|
| Three Months Ended March 31, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | 111 |
|
| $ | (126 | ) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
| 167 |
|
|
| 190 |
|
Amortization of finite-lived intangible assets |
|
| 20 |
|
|
| 14 |
|
Gain on disposal of assets |
|
| — |
|
|
| (43 | ) |
Stock-based compensation |
|
| 7 |
|
|
| (16 | ) |
Deferred income tax benefit |
|
| (7 | ) |
|
| — |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Decrease in accounts receivable, net |
|
| 318 |
|
|
| 62 |
|
Increase in inventories, net |
|
| (412 | ) |
|
| (4 | ) |
Increase in prepaid expenses and other assets |
|
| (95 | ) |
|
| (69 | ) |
Increase in accounts payable, accrued compensation and commissions expense and other accrued liabilities |
|
| 110 |
|
|
| 63 |
|
Net cash provided by operating activities |
|
| 219 |
|
|
| 71 |
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Purchase of marketable securities |
|
| (1,002 | ) |
|
| — |
|
Capital expenditures |
|
| (6 | ) |
|
| (48 | ) |
Net cash used in investing activities |
|
| (1,008 | ) |
|
| (48 | ) |
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents |
|
| (789 | ) |
|
| 23 |
|
Cash and cash equivalents at beginning of period |
|
| 2,778 |
|
|
| 5,553 |
|
Cash and cash equivalents at end of period |
| $ | 1,989 |
|
| $ | 5,576 |
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure: |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ | — |
|
| $ | — |
|
Cash paid for income taxes |
| $ | 18 |
|
| $ | 20 |
|
Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (126 | ) | $ | (178 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | 190 | 202 | ||||||
| Amortization of finite-lived intangible assets | 14 | 26 | ||||||
| Stock-based compensation | (16 | ) | 13 | |||||
| Gain on disposal of assets | (43 | ) | — | |||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease in accounts receivable, net | 62 | 114 | ||||||
| (Increase) decrease in inventories, net | (4 | ) | 168 | |||||
| Increase in other assets | (69 | ) | (36 | ) | ||||
| Increase (decrease) in trade accounts payable, accrued compensation and commissions expense, accrued warranty expense and other accrued liabilities | 63 | (197 | ) | |||||
| Net cash provided by operating activities | 71 | 112 | ||||||
| INVESTING ACTIVITIES | ||||||||
| Capital expenditures | (48 | ) | (256 | ) | ||||
| Net cash used in investing activities | (48 | ) | (256 | ) | ||||
| Increase (decrease) in cash and cash equivalents | 23 | (144 | ) | |||||
| Cash and cash equivalents at beginning of period | 5,553 | 5,192 | ||||||
| Cash and cash equivalents at end of period | $ | 5,576 | $ | 5,048 | ||||
Supplemental Disclosure: | ||||||||
| Cash paid for interest | $ | — | $ | — | ||||
| Cash paid for income taxes | $ | 20 | $ | 5 | ||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
A. | Subsidiaries of the Registrant |
The LGL Group, Inc. (together with its subsidiaries, the(the "Company"), 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 the designdesigning, manufacturing and manufacturemarketing of highly-engineered, highreliability frequency and spectrum control products.
As of March 31, 2016,2017, the subsidiaries of the Company arewere as follows:
Owned By The LGL Group, Inc. | ||||
M-tron Industries, Inc. | 100.0% | |||
Piezo Technology, Inc. | 100.0% | |||
Piezo Technology India Private Ltd. | 99.0% | |||
M-tron Asia, LLC | 100.0% | |||
M-tron Industries, Ltd. | 100.0% | |||
GC Opportunities Ltd. | 100.0% | |||
M-tron Services, Ltd. | 100.0% | |||
Precise Time and Frequency, LLC | 100.0% | |||
Lynch Systems, Inc. | 100.0% | |||
The Company operates through its two principal subsidiary,subsidiaries, M-tron Industries, Inc. (“MtronPTI”), which includes the operations of Piezo Technology, Inc. ("PTI") and M-tron Asia, LLC ("Mtron")., and Precise Time and Frequency, LLC ("PTF"), a subsidiary formed to hold the assets of Precise Time and Frequency, Inc. acquired September 2, 2016. Additionally, the Company operates in two identified segments. The combined operationsfirst segment, the electronic components segment, is focused on the design and manufacture of Mtronhighly-engineered, high reliability frequency and PTIspectrum control products. These electronic components ensure reliability and their subsidiaries are referred to herein as "MtronPTI." MtronPTIsecurity in aerospace and defense communications, low noise and base accuracy for laboratory instruments, and synchronous data transfers throughout the wireless and Internet infrastructure. The second segment, the electronic instruments segment, is focused on the design and manufacture of high performance Frequency and Time Reference Standards that form the basis for timing and synchronization in various applications. The Company has operations in Orlando, Florida, Yankton, South Dakota, Wakefield, Massachusetts and Noida, India. MtronPTI also hasIndia and sales offices in Sacramento, California, Austin, Texas and Hong Kong.
B. | Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles generally accepted in the United States of America ("GAAP"(“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2016,2017, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016.
This interim information should be read in conjunction with the audited consolidated financial statements and related notes thereto set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2015,2016, filed with the Securities and Exchange Commission (the "SEC") on March 29, 2016.
C. | Inventories |
Inventories are valued at the lower of cost or marketnet realizable value using the FIFO (first-in, first-out) method. The Company reduces the value of its inventories to net realizable value market value when the marketnet realizable value is believed to be less than the cost of the item. The inventory reserve for obsolescence as of March 31, 20162017 and December 31, 20152016 was $3,072,000$2,793,000 and $3,016,000,$2,773,000, respectively.
Inventories are comprised of the following (in thousands):
|
| March 31, 2017 |
|
| December 31, 2016 |
| ||
Raw materials |
| $ | 1,524 |
|
| $ | 1,408 |
|
Work in process |
|
| 1,518 |
|
|
| 1,306 |
|
Finished goods |
|
| 1,008 |
|
|
| 924 |
|
Total Inventories, net |
| $ | 4,050 |
|
| $ | 3,638 |
|
| March 31, 2016 | December 31, 2015 | |||||||
| Raw materials | $ | 1,289 | $ | 1,418 | ||||
| Work in process | 1,505 | 1,325 | ||||||
| Finished goods | 756 | 803 | ||||||
| Total Inventories, net | $ | 3,550 | $ | 3,546 | ||||
D. | Intangible Assets |
Intangible assets are recorded at cost less accumulated amortization.amortization and included in engineering, selling and administrative expenses in the unaudited accompanying condensed consolidated statements of operations. Amortization is computed for financial reporting purposes using the straight-line method over the estimated useful lives of the assets, which range up to 10 years and is recorded as part of engineering, selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations.years. The intangible assets consist of intellectual property and goodwill. The net carrying value of the amortizable intangible assets was $421,000$569,000 and $435,000$588,000 as of March 31, 20162017 and December 31, 2015,2016, respectively. Goodwill, which is not amortizable, was $40,000 as of March 31, 20162017 and December 31, 2015.
The estimated aggregate amortization expense for intangible assets, excluding goodwill, for the remaining portion of 20162017 and each of the four succeeding years and thereafter is as follows (in thousands):
2017 | $ | 56 |
|
2018 |
| 75 |
|
2019 |
| 75 |
|
2020 |
| 75 |
|
2021 |
| 75 |
|
Thereafter |
| 213 |
|
Total | $ | 569 |
|
| 2016 | $ | 40 | ||
| 2017 | 54 | |||
| 2018 | 54 | |||
| 2019 | 54 | |||
| 2020 | 54 | |||
| Thereafter | 165 | |||
| Total | $ | 421 |
E. | CNB Loan |
On September 30, 2016, MtronPTI renewed its Loan Agreement (the “CNB Loan Agreement”), with City National Bank of Florida (“City National”). The CNB Loan Agreement provides for a revolving line of credit in the amount of $3.0 million (the “CNB Revolver”), which bears interest at a variable rate equal to the 30-day London Interbank Offered Rate (“LIBOR”) plus 200 basis points to be set on the first day of each month, and expires on September 30, 2018. The CNB Loan Agreement also provides that MtronPTI will pay City National a fee equal to 0.75% per year on the daily unused amount. The Company's obligations under the CNB Loan Agreement are secured only by cash collateral and do not require any other liens.
At March 31, 2017 and December 31, 2016, there was no balance outstanding under the CNB Revolver and no associated restricted cash.
F. | Stock-Based Compensation |
The Company measures the cost of employee services in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the cost over the requisite service period, typically the vesting period.
The Company estimates the fair value of stock options 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 basis for the expected volatility assumption as the Company believes that the historical volatility over the life of the option is indicative of expected volatility in the future. The risk-free interest rate is based on the U.S. Treasury zero-coupon rates with a remaining term equal to the expected term of the option. The Company also estimates forfeitures at the time of grant and revises, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Restricted stock awards are made at a value equal to the market price of the Company's common stock on the date of the grant.
G. | Net |
The Company computes net lossincome (loss) per share in accordance with ASCAccounting Standards Codification ("ASC") 260, Earnings Per Share ("ASC 260"). Basic net lossincome (loss) per share is computed by dividing net lossincome (loss) by the weighted average number of common shares outstanding during the period. Diluted net lossincome (loss) per share adjusts basic lossincome (loss) per share for the effects of stock options, non-participating restricted common stock, and other potentially dilutive financial instruments, only in the periods in which the effects are dilutive. Shares of restricted stock granted to members of the BoardCompany’s board of Directorsdirectors (the “Board”) as a portion of their director fees are deemed to be participating as defined by ASC 260 and therefore are included in the computation of basic lossincome (loss) per share.
For the three months ended March 31, 20162017 and 2015,2016, there were options to purchase 117,226105,135 shares and 203,450117,226 shares, respectively, of the Company's common stock and warrants to purchase 519,241 shares of common stock that were excluded from the diluted lossincome (loss) per share computation because the impact of the assumed exercise of such stock options would have been anti-dilutive during the respective periods.
The following table reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding for the three months ended March 31, 2017 and 2016:
|
| Three Months Ended |
| |||||
|
| March 31, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Weighted average shares outstanding - basic |
|
| 2,675,466 |
|
|
| 2,665,434 |
|
Effect of diluted securities |
|
| 13,018 |
|
|
| — |
|
Weighted average shares outstanding - diluted |
|
| 2,688,484 |
|
|
| 2,665,434 |
|
H. | Stockholders’ Equity |
On August 29, 2011, the Board authorized the Company to repurchase up to 100,000 shares of its common stock in accordance with applicable securities laws. This authorization increased the total number of shares authorized and available for repurchase under the Company's existing share repurchase program to 540,000 shares, at such times, amounts and prices as the Company shall deem appropriate. As of March 31, 2016,2017, the Company had repurchased a total of 79,66481,584 shares of common stock at a cost of $572,000,$580,000, which shares are currently held in treasury.
On August 6, 2013, the Company distributed warrants to purchase shares of the Company's common stock as a dividend to holders of the Company's common stock onas of July 29, 2013, the record date for the dividend. Stockholders received five warrants for each share of the Company's common stock owned on the record date. When exercisable, 25 warrants will entitle theirthe holder to purchase one share of the Company's common stock at an exercise price of $7.50 per share (subject to adjustment).
The warrants are "European style warrants" and will only become exercisable on the earlier of (i) their expiration date, August 6, 2018, and (ii) such date that the 30-day volume weighted average price per share, or VWAP, of the Company's common stock is greater than or equal to $15.00 (subject to adjustment). Once the warrants become exercisable, they may be exercised in accordance with the terms of the warrant agreement between the Company and the warrant agent until their expiration at 5:00 p.m., Eastern Time, on the expiration date.
The warrants are quoted on the over-the-counter market under the symbol "LGLPW."
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in accordance with ASC 820, Fair Value Measurements and Disclosures. These measurements involve various valuation techniques and assume that the transactions would occuran orderly transaction between market participants inat the most advantageousmeasurement date. Fair value guidance identifies three primary valuation techniques: the market forapproach, the Company.
The fair value hierarchy prioritizes the inputs that may beto valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to observable inputs such as quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The maximization of observable inputs and the minimization of the use of unobservable inputs are required.
Classification within the fair value hierarchy is based upon the objectivity of the inputs that are significant to the valuation of an asset or liability as of the measurement date. The three levels within the fair value hierarchy are characterized as follows:
Level 18
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for itsthe asset or liability, either directly or indirectly. Level 2 inputs include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 - Unobservable inputs for the asset or liability for which there is little, if any, market activity for the asset or liability at the measurement date. Unobservable inputs reflect the Company's own assumptions about what market participants would use to price the asset or liability. These inputs may include internally developed pricing models, discounted cash flow methodologies, as well as instruments for which the fair value determination requires significant financial and non-financial assets and liabilities as of March 31, 2016 and December 31, 2015:
Assets
To estimate the fairmarket value of its equity and U.S. Treasurymarketable securities, the Company obtains current market pricing from quoted market sources or uses pricing for identical securities. Assets measured at fair value on a recurring basis are summarized below (in thousands).
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total March 31, 2017 |
| ||||
Marketable Securities (equity securities) |
| $ | 3,793 |
|
| $ | — |
|
| $ | — |
|
| $ | 3,793 |
|
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total December 31, 2016 |
| ||||
Marketable Securities (equity securities) |
| $ | 2,770 |
|
| $ | — |
|
| $ | — |
|
| $ | 2,770 |
|
U.S. Treasury securities (cash equivalents) |
| $ | 1,002 |
|
| $ | — |
|
| $ | — |
|
| $ | 1,002 |
|
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total March 31, 2016 | |||||||||||||
Equity securities | $ | 53 | $ | — | $ | — | $ | 53 | ||||||||
| U.S. Treasury securities (cash equivalents) | $ | 4,091 | $ | — | $ | — | $ | 4,091 | ||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total December 31, 2015 | |||||||||||||
Equity securities | $ | 56 | $ | — | $ | — | $ | 56 | ||||||||
| U.S. Treasury securities (cash equivalents) | $ | 4,089 | $ | — | $ | — | $ | 4,089 | ||||||||
There were no transfers from level 2 to level 3 during the period.three months ended March 31, 2017 or 2016. There were no level 2 or 3 assets as of March 31, 20162017 or December 31, 2015.
The Company reviews goodwill annually and the carrying value of theselong-lived assets whenever events and circumstances indicate that the carrying amounts of the assets may not be recoverable. If it is determined that the assets are impaired, the carrying value would be reduced to estimated fair value.
The Company has two reportable business segments from operations: electronic components, which includes all products manufactured and sold by MtronPTI, and electronic instruments, which includes all products manufactured and sold by PTF. The Company's foreign operations in Hong Kong and India exist under MtronPTI.
Operating income (loss) is equal to revenues less cost of sales and operating expenses, excluding investment income, interest expense, and income taxes.
|
| Three Months Ended March 31, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
|
| (in thousands) |
| |||||
Revenues from Operations |
|
|
|
|
|
|
|
|
Electronic components |
| $ | 5,392 |
|
| $ | 4,756 |
|
Electronic instruments |
|
| 232 |
|
|
| — |
|
Total consolidated revenues |
| $ | 5,624 |
|
|
| 4,756 |
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss) from Operations |
|
|
|
|
|
|
|
|
Electronic components |
| $ | 326 |
|
| $ | 86 |
|
Electronic instruments |
|
| 36 |
|
|
| — |
|
Unallocated corporate expense |
|
| (254 | ) |
|
| (248 | ) |
Consolidated total operating income (loss) |
|
| 108 |
|
|
| (162 | ) |
Interest expense, net |
|
| (6 | ) |
|
| (6 | ) |
Other income, net |
|
| 12 |
|
|
| 42 |
|
Total other income |
|
| 6 |
|
|
| 36 |
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes |
| $ | 114 |
|
| $ | (126 | ) |
K. | Domestic and Foreign Revenues |
For the three months ended March 31, 2017 and 2016, domestic revenues were $3,982,000 and 2015, significant$3,482,000, respectively and foreign revenues were $1,642,000 and $1,274,000, respectively. Significant foreign revenues from operations (10% or more of foreign sales) were as follows:
|
| Three Months Ended March 31, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
|
| (in thousands) |
| |||||
Malaysia |
| $ | 823 |
|
| $ | 726 |
|
Hong Kong |
|
| 92 |
|
|
| 132 |
|
All other foreign countries |
|
| 727 |
|
|
| 416 |
|
Total foreign revenues |
| $ | 1,642 |
|
| $ | 1,274 |
|
Total domestic revenue |
| $ | 3,982 |
|
| $ | 3,482 |
|
Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| Significant Foreign Revenues: | ||||||||
| Malaysia | $ | 726 | $ | 598 | ||||
| Hong Kong | 132 | 79 | ||||||
| China | 63 | 235 | ||||||
| All other foreign countries | 353 | 544 | ||||||
| Total foreign revenues | $ | 1,274 | $ | 1,456 | ||||
The Company allocates its foreign revenue based on the customer's ship-to location.
L. | Commitments and Contingencies |
In the normalordinary course of business, the Company and its subsidiaries may become defendants in certain product liability, patent infringement, worker claims and other litigation. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. TheThe Company is not involved in any legal proceedings other than routine litigation arising in the normal course of business, none of which the Company believes will have a material adverse effect on the Company'sCompany’s business, financial condition or results of operations.
As of March 31, 20162017 and December 31, 2015,2016, approximately $4,091,000$3,736,000 and $4,089,000,$2,714,000, respectively, was invested in a market neutral mutual fund which is included in marketable securities on the accompanying balance sheet. As of December 31, 2016 approximately $1,002,000 was also invested in a United States Treasury money market fundsfund which is included in cash and cash
equivalents on the accompanying balance sheet. Both the market neutral mutual fund and the United States Treasury money market fund are managed by a related entity (the "Fund Manager") which is related through a common director. One of the Company's directors, who is also a 10% stockholder, currently serves as a director andan executive officer of the Fund Manager. The fund transactions duringfor the three months ended March 31, 20162017 and for the year ended December 31, 2015,2016 were directed solely at the discretion of Company management. There are no management fees associated
The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with fund transactions.
Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q of the Company and the Company's other communications and statements, other than historical facts, may contain "forward-lookingbe considered forward-looking statements" including within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends for all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable by law. Such statements include, in particular, statements about the Company's beliefs, plans, objectives, goals, expectations, estimates, projections and intentions. These statements are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond the Company's control. The words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan," "target," "goal," and similar expressions are intended to identify forward-looking statements. All forward-looking statements, by their nature, are subject to risks and uncertainties. Therefore, such statements are not intended to be a guarantee of the Company's performance in future periods. The Company's actual future results may differ materially from those set forth in the Company's forward-looking statements. For information concerning these factors and related matters, see "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015,2016, filed with the Securities and Exchange Commission (the "SEC")the SEC on March 29, 2016,2017, as amended, this Quarterly Report on Form 10-Q and our other filings with the SEC. However, other factors besides those referenced could adversely affect the Company's results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statements made by the Company herein speak as of the date of this Report.Quarterly Report on Form 10-Q. The Company does not undertake to update any forward-looking statement, except as required by law. As a result, you should not place undue reliance on these forward-looking statements.
Results of Operations
Three months ended March 31, 2016,2017 compared to three months ended March 31, 2015
Consolidated Revenues, and Gross Margin
Total revenues for the three months ended March 31, 20162017 were $4,756,000, a decrease$5,624,000, an increase of 12.0%18.3% from revenues of $5,404,000$4,756,000 for the same prior year period. Price compression from offshore manufacturers has continued to reducethree months ended March 31, 2016. Approximately 73% of the number of economically feasible opportunities in the Internet Communications Technology ("ICT") market segment. The Company continuesincrease is being driven by management’s strategy to move away from such low margin commodities business and focus on achieving revenue growth through the development of more complex, and higher margin products, particularly in the Aerospace and Defense ("Aero/Defense") market segment.
Consolidated gross margin, which is consolidated revenues less manufacturing cost of sales, as a percentage of revenues decreasedincreased to 31.5%36.7% from 33.3%31.5% for the three months ended March 31, 2016,2017, compared to the same prior year period.three months ended March 31, 2016. The slight declineincrease reflects the 18.3% increase in marginrevenue which aligns with our strategy to move away from the prior year period was primarily due tolow margin commodities business and focus on achieving revenue growth through the affectdevelopment of lower overall revenues onmore complex, higher margin products, particularly in the fixed portionAero/Defense market segment.
As of manufacturing costs.
Order backlog is adjusted quarterly to reflect project cancellations, deferrals, revised project scope and cost, and sales of subsidiaries, if any. The Company expectsWe expect to fill itsour entire order backlog within the next 12twelve months, but cannot provide assurances as to what portion of the order backlog will be fulfilled in a given year.
Operating Loss
Operating income was $108,000 for the three months ended March 31, 2017, compared to an operating loss wasof ($162,000) for the three months ended March 31, 2016, which was comparable2016. The improvement is due to the operating loss of ($161,000) for the three months ended March 31, 2015.
For the three months ended March 31, 2016, stock-based compensation expense2017, other income, net was ($16,000) due$12,000 compared to the effect of forfeitures. For the three months ended March 31, 2015, stock-based compensation expense was $13,000. Compensation expense related to stock-based compensation is recognized over the applicable vesting periods. As of March 31, 2016, there was approximately $31,000 of total unrecognized compensation expense related to unvested share-based compensation arrangements.
Income Taxes
We recorded a tax provision or tax(provision) benefit of ($3,000) and $0 for the three months ended March 31, 2017 and 2016, and 2015.
Based on the Company'sour assessment of the uncertainty surrounding the realization of the favorable U.S. tax benefitsattributes in future tax returns. When assessingreturns in accordance with the needprovisions of ASC 740, Income Taxes, we have determined that it is more likely than not that deferred tax assets generated from foreign NOLs, can be utilized in the foreseeable future and a valuation allowance for these assets is not required. We also determined that a full valuation allowances,against the Company considers future taxable incomeremaining U.S net deferred tax assets is required and ongoing prudent and feasiblehave recorded a valuation allowance to reduce deferred tax planning strategies.assets to the amount that is more likely than not to be realized. Should a change in circumstances lead to a change in judgment about the ability to realize deferred tax assets in future years, the Companywe will adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.
Net Loss
Net income for the three months ended March 31, 2016, improved to ($126,000)2017, was $111,000 compared to a net loss of ($178,000)126,000) for the comparable period in 2015.three months ended March 31, 2016. Basic and diluted net lossincome (loss) per share for the three month periods ended March 31, 2017 and 2016, and 2015, was ($0.05)$0.04 and ($0.07)0.05), respectively.
Stock-Based Compensation
For the three months ended March 31, 2016 from $5,553,000 at December 31, 2015.
Liquidity and Capital Resources
As of March 31, 2017 and 2016, cash and cash equivalents were $1,989,000 and $2,778,000, respectively. In December 2016 and 2015,January 2017, we transferred certain investments in U.S. Treasury securities (cash equivalents) to equity securities, which are classified as marketable securities on our consolidated balance sheets.
Cash provided by operating activities was $219,000 and $71,000 for the three months ended March 31, 2017 and 2016, respectively. The decrease$148,000 increase was due primarily due to an improvement in net income (loss) of $237,000, a year-over-year increase in non-cash adjustments for adepreciation, stock-based compensation, gain on the disposal of assets and stock-based compensationa deferred tax benefit totaling of $42,000, offset by an improvementa year-over year net change in net loss.
Cash used in investing activities for the three months ended March 31, 20162017 and 20152016 was ($48,000)1,008,000) and ($256,000)48,000), respectively.
The decreaseincrease was primarily due to the transfer of certain investments in U.S. Treasury securities to equity securities, which are classified as an investing activity on our consolidated statements of cash flows offset by a reductiondecline in capital expenditures.
There were no financing activities for the Company'sthree months ended March 31, 2017 and 2016.
As of March 31, 2017, our consolidated working capital was $9,890,000,$10,447,000 compared to $9,876,000 at$10,135,000 as of December 31, 2015. At2016. As of March 31, 2016, the Company2017, we had current assets of $12,029,000,$13,312,000, current liabilities of $2,139,000$2,865,000 and a ratio of current assets to current liabilities of 5.62 to 4.65:1.00. AtAs of December 31, 2015, the Company2016, we had current assets of $11,952,000,$12,890,000, current liabilities of $2,076,000$2,755,000 and a ratio of current assets to current liabilities of 5.76 to 4.68:1.00. Management continues to focus on efficiently managing working capital requirements to match operating activity levels.
On September 30, 2014,2016, MtronPTI entered into arenewed the CNB Loan Agreement (the "CNB Loan Agreement"), with City National Bank of Florida ("City National").National. The CNB Loan Agreement provides for a revolving line of creditthe CNB Revolver in the amount of $3.0 million, (the "CNB Revolver"), which bears interest at a variable rate equal to the 30-day LIBOR plus 200 basis points to be set on the first day of each month, and expires on September 30, 2016.2018. The CNB Loan Agreement also provides that MtronPTI will pay City National a fee equal to 0.75% per year on the daily unused amount. The Company'sOur obligations under the CNB Loan Agreement are secured only by cash collateral and do not require any other liens.
In connection with the CNB Loan Agreement, MtronPTI also entered into a Cash Collateral Agreement with City National (the "CNB Cash Collateral Agreement") and delivered a Revolving Promissory Note in the principal amount of $3.0 million to City National (the "CNB Revolving Promissory Note").
The CNB Cash Collateral Agreement provides that MtronPTI will hold cash collateral equal to any amounts outstanding under the CNB Revolver in a non-interest bearing deposit account with City National. Provided that MtronPTI is not in default of any of its obligations under the CNB Loan Agreement, the CNB Revolving Promissory Note or the CNB Cash Collateral Agreement, the funds collateralizing the CNB Revolver are restricted only to the extent of the outstanding principal amount under the CNB Revolver. AtAs of March 31, 20162017 and December 31, 2015,2016, there was no balance outstanding under the CNB Revolver and no associated restricted cash.
We believe that existing cash and cash equivalents and cash generated from operations and available line of credit will be sufficient to meet itsour ongoing working capital and capital expenditure requirements for the next 12 months.through May 31, 2018. However, the Companywe may seek additional capital to fund future growth in its business, to provide flexibility to respond to dynamic market conditions, or to fund itsour strategic growth objectives.
Our Board has adhered to a practice of not paying cash dividends. This policy takes into account our long-term growth objectives, including our anticipated investments for organic growth, potential technology acquisitions or other strategic ventures, and stockholders' desire for capital appreciation of their holdings. No cash dividends have been paid to the Company's stockholders since January 30, 1989, and none are expected to be paid for the foreseeable future.
Critical Accounting Policies
Our accounting policies and unaudited condensed consolidated financial statements have been prepared in accordanceestablished to conform with accounting principles generally accepted in the United States of America.GAAP. The preparation of suchfinancial statements in conformity with GAAP requires us to makeuse judgment in the application of accounting policies, including making estimates and assumptions thatassumptions. These judgments affect the reported amounts of revenues and expenses during the reporting period and the reported amounts of assets and liabilities asand disclosure of contingent assets and liabilities at the datedates of the financial statements. Ourstatements and the reported amounts of revenue and expenses during the reporting periods. We believe we have made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using historical knowledge of the business, as well as other factors, to ensure that they are based on historical experience and other assumptions that we consider to be reasonable given the circumstances. Actualfor reporting purposes. However, actual results may varydiffer from our estimates.
Revenue recognition;
Accounts receivable allowance;
Inventory valuation;
Intangible assets;
Income taxes; and
Segment information.
There have been no significant changes to our critical accounting policies from those described in determiningNote A – Accounting and Reporting Policies to the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. The future recoverability ofconsolidated financial statements in the Company's net deferred tax assets is dependent upon the generation of future taxable income prior to the expiration of the loss carry forwards. The Company maintains a full valuation allowance against the Company's net deferred tax assets. The valuation allowance was calculated in accordance with the provisions of ASC 740, which requires an assessment of both positive and negative evidence when measuring the need for a valuation allowance. We intend to maintain a valuation allowance until sufficient positive evidence exists to support its reversal.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Not applicable.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the end ofExchange is recorded, processed, summarized and reported within the period covered by this report,time periods specified in the Company's principalrules and forms, and that such information is accumulated and communicated to us, including our chief executive officer and principalchief financial officer, evaluatedas appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgment in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs.
As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of March 31, 2017 was conducted under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the Company'sour 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"))Act). Based on theirthis evaluation, of the Company'sour chief executive officer and chief financial officer concluded that our 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 March 31, 2016, to ensure that information required to be disclosed by2017, were effective at 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.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal controls over financial reporting during the fiscal quarter ended March 31, 2016, there were no changes in the Company's internal controls over financial reporting,2017, or in other factors that could significantly affect these controls, that materially affected, or are reasonably likely to materially affect, the Company'sour internal controlcontrols over financial reporting.
Item 1. |
In the ordinary course of business we may become subject to litigation or claims. We are not aware of any material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we are a party or to which our properties are subject.
Item 1A. |
Not applicable.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
None.
Item 3. |
None.
Item 4. |
None.
Item 5. |
None.
The following is a listexhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 (and are numbered in accordance with Item 601 of exhibits filed as part of this Form 10-Q:
Exhibit No. | Description | ||
2.1 | Asset Purchase Agreement, dated as of January 31, 2014, made between M-tron Industries, Inc. and Trilithic, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 15, 2014). | ||
3.1 | Certificate of Incorporation of The LGL Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 31, 2007). | ||
3.2 | The LGL Group, Inc. By-Laws (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed with the SEC on August 31, 2007). | ||
3.3 | The LGL Group, Inc. Amendment No. 1 to By-Laws (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on June 17, 2014). | ||
4.1 | Warrant Agreement, dated as of July 30, 2013, by and among The LGL Group, Inc., Computershare Inc. and Computershare Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 14, 2013). | ||
31.1* | Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2* | Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32.1** | Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
32.2** | Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101.INS* | XBRL Instance | ||
101.SCH* | XBRL Taxonomy Extension Schema Document |
XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
____________
* Filed herewith
** In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
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.
THE LGL GROUP, INC. | |||
Date: May | By: | /s/ Michael J. Ferrantino, Sr. | |
Michael J. Ferrantino, Sr. | |||
President and Chief Executive Officer (Principal Executive Officer) | |||
Date: May | By: | /s/ Patti A. Smith | |
Patti A. Smith | |||
Chief Financial Officer (Principal Financial and Accounting Officer) | |||
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