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

~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the quarterly period ended ~~September~~June 30, ~~2017~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~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. 001-00106

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
~~2525 Shader Rd., Orlando, Florida~~(Address of principal executive offices)	~~32804~~(Zip Code)
~~(Address of principal executive offices)~~	~~(Zip Code)~~

(407) 298-2000

(~~Registrant’s~~Registrant’s telephone number, including area code)

~~(Former name, former address, and former fiscal year if changed since last report)~~

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01

Warrants to Purchase Common Stock, par value $0.01

LGL

LGL WS

NYSE American

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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “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~~As of August 10, 2023, the ~~number of~~registrant had 5,352,937 shares ~~outstanding of each of the issuer’s classes~~ of common stock, as$0.01 par value per share, outstanding.

Table of ~~the latest practicable date.~~

~~Class~~		~~Outstanding at November 3, 2017~~
~~Common Stock, $0.01 par value per share~~		~~2,675,465~~

Contents

~~INDEX~~

THE LGL GROUP, INC.

Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, 2023

INDEX

		PAGE
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance ~~Sheets:~~Sheets	1
	~~– As of September 30, 2017~~
	~~– As of December 31, 2016~~

	Condensed Consolidated Statements of ~~Operations:~~Operations	2
	~~– Three and nine months ended September 30, 2017 and 2016~~

	Condensed Consolidated Statements of ~~Comprehensive Income (Loss):~~Stockholders’ Equity	3
	~~– Three and nine months ended September 30, 2017 and 2016~~

	~~Condensed Consolidated Statement of Stockholders’ Equity:~~	4
	~~– Nine months ended September 30, 2017~~

	Condensed Consolidated Statements of Cash ~~Flows:~~Flows	54
	~~– Nine months ended September 30, 2017 and 2016~~

	Notes to Condensed Consolidated Financial ~~Statements:~~Statements	6
		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
		13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
		18
Item 4.	Controls and Procedures	17
		18
PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	19

~~Item 1A.~~	~~Risk Factors~~	19

~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	19

~~Item 3.~~	~~Defaults Upon Senior Securities~~	19

~~Item 4.~~	~~Mine Safety Disclosures~~	19

Item 5.	Other Information	19

Item 6.	Exhibits	19
		23
SIGNATURES		2124

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements.

The LGL Group, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except par value and share amounts)

	June 30, 2023 (unaudited)			December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	40,314		$	21,507
Marketable securities		25			16,585
Accounts receivable, net of reserves of $58 and $86, respectively		373			543
Inventories, net		226			265
Prepaid expenses and other current assets		266			440
Total Current Assets		41,204			39,340
Net property, plant, and equipment		—			1
Right-of-use lease assets		87			132
Intangible assets, net		72			78
Deferred income tax assets		216			234
Total Assets	$	41,579		$	39,785
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable		58			310
Accrued compensation and commissions		238			170
Income taxes payable		—			1
Other accrued expenses		207			106
Total Current Liabilities		503			587
Other liabilities		687			708
Total Liabilities		1,190			1,295
Contingencies (Note M)
EQUITY
Common stock, $0.01 par value - 30,000,000 shares authorized; 5,434,521 shares issued and 5,352,937 shares outstanding at June 30, 2023 and December 31, 2022		53			53
Additional paid-in capital		46,346			46,346
Retained earnings		(7,302	)		(7,329	)
Treasury stock, 81,584 shares held in treasury at cost at June 30, 2023 and December 31, 2022		(580	)		(580	)
Stockholders' Equity		38,517			38,490
Non-controlling interests		1,872			—
Total Equity		40,389			38,490
Total liabilities and equity	$	41,579		$	39,785

~~PART I~~

~~FINANCIAL INFORMATION~~

~~Item 1.~~

~~Financial Statements.~~

~~THE LGL GROUP, INC.~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

~~(Dollars in Thousands, Except Per Share Amounts)~~

September 30,
2017

December 31,
2016

(Unaudited)

(Audited)

ASSETS

Current Assets:

Cash and cash equivalents

$
1,976

$
2,778

Marketable securities

3,787

2,770

Accounts receivable, net of allowances of $27 and $31, respectively

3,237

3,504

Inventories, net

3,907

3,638

Prepaid expenses and other current assets

214

200

Total Current Assets

13,121

12,890

Property, plant and equipment:

Land

536

633

Buildings and improvements

3,973

3,966

Machinery and equipment

16,959

16,849

Gross property, plant and equipment

21,468

21,448

Less: accumulated depreciation

(19,201
)

(18,737
)
Net property, plant, and equipment

2,267

2,711

Intangible assets, net

572

628

Deferred income taxes, net

202

214

Other assets, net

337

203

Total Assets

$
16,499

$
16,646

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

$
1,278

$
1,525

Accrued compensation and commissions

881

942

Other accrued expenses

251

288

Total Current Liabilities

2,410

2,755

Commitments and Contingencies (Note L)

Stockholders’ Equity

Common stock, $0.01 par value - 10,000,000 shares authorized; 2,757,049 shares
issued and 2,675,465 shares outstanding at September 30, 2017 and December 31, 2016

27

27

Additional paid-in capital

29,195

29,173

Accumulated deficit

(14,578
)

(14,726
)
Treasury stock, 81,584 shares held in treasury at cost at September 30, 2017 and December 31, 2016

(580
)

(580
)
Accumulated other comprehensive income (loss)

25

(3
)
Total Stockholders' Equity

14,089

13,891

Total Liabilities and Stockholders' Equity

$
16,499

$
16,646

See Accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

The LGL Group, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except share and per share amounts)

~~THE LGL GROUP, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED~~

~~(Dollars in Thousands, Except Per Share Amounts)~~

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

REVENUES

$
5,262

$
5,128

$
16,745

$
15,115

Costs and expenses:

Manufacturing cost of sales

3,513

3,353

11,063

10,069

Engineering, selling and administrative

1,748

1,803

5,529

5,210

OPERATING INCOME (LOSS)

1

(28
)

153

(164
)
Other Income (Expense):

Interest expense, net

(6
)

(7
)

(17
)

(20
)
Other income, net

24

67

42

105

Total Other Income

18

60

25

85

INCOME (LOSS) BEFORE INCOME TAXES

19

32

178

(79
)
Income tax (provision) benefit

(2
)

—

(30
)

1

NET INCOME (LOSS)

$
17

$
32

$
148

$
(78
)

Basic per share information:

Weighted average shares outstanding

2,675,465

2,665,189

2,675,465

2,665,352

Net income (loss)

$
0.01

$
0.01

$
0.06

$
(0.03
)

Diluted per share information:

Weighted average shares outstanding

2,689,911

2,665,831

2,688,544

2,665,352

Net income (loss)

$
0.01

$
0.01

$
0.06

$
(0.03
)

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
	*2023*			*2022*			*2023*			*2022*
REVENUES	$	403		$	370		$	844		$	787
Costs and expenses:
Manufacturing cost of sales		208			227			400			469
Engineering, selling and administrative		633			623			1,191			1,645
OPERATING LOSS		(438	)		(480	)		(747	)		(1,327	)
Other income (expense):
Interest income, net		275			9			473			5
Investment income (loss)		43			(2,373	)		388			(2,328	)
Other (expense) income, net		(12	)		1			(24	)		2
Total other income (expense), net		306			(2,363	)		837			(2,321	)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(132	)		(2,843	)		90			(3,648	)
Income tax (benefit) expense		(2	)		(588	)		63			(754	)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS		(130	)		(2,255	)		27			(2,894	)
Income from discontinued operations, net of tax		—			457			—			1,265
NET (LOSS) INCOME	$	(130	)	$	(1,798	)	$	27		$	(1,629	)

Net (Loss) Income per Basic Share:
Continuing operations	$	(0.02	)	$	(0.42	)	$	0.01		$	(0.54	)
Discontinued operations		—			0.08			—			0.23
Total Net (Loss) Income per Basic Share	$	(0.02	)	$	(0.34	)	$	0.01		$	(0.31	)

Net (Loss) Income per Diluted Share:
Continuing operations	$	(0.02	)	$	(0.42	)	$	0.01		$	(0.54	)
Discontinued operations		—			0.08			—			0.23
Total Net (Loss) Income per Diluted Share	$	(0.02	)	$	(0.34	)	$	0.01		$	(0.31	)

Weighted average shares outstanding:
Basic		5,352,937			5,334,187			5,352,937			5,329,080
Dilutive		5,352,937			5,334,187			5,352,937			5,329,080

See Accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

~~THE~~The LGL ~~GROUP, INC.~~Group, Inc.

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - UNAUDITED~~Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(~~Dollars in Thousands)~~In thousands, except share amounts)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

NET INCOME (LOSS)

$
17

$
32

$
148

$
(78
)
Other Comprehensive Income (Loss):

Unrealized (loss) gain on available-for-sale securities, net of taxes

(14
)

6

28

—

TOTAL OTHER COMPREHENSIVE (LOSS) INCOME

(14
)

6

28

—

COMPREHENSIVE INCOME (LOSS)

$
3

$
38

$
176

$
(78
)

	*Shares of Common Stock Outstanding*		*Common Stock*		*Additional Paid-In Capital*			*Retained Earnings (Accumulated Deficit)*			*Treasury Stock*			*Non- Controlling Interests*		*Total*
Balance at December 31, 2022		5,349,187	$	53	$	46,346		$	(7,329	)	$	(580	)	$	—	$	38,490
Net income, Q1 2023		—		—		—			157			—			—		157
Stock-based compensation		3,750		—		—			—			—			—		—
Balance at March 31, 2023		5,352,937	$	53	$	46,346		$	(7,172	)	$	(580	)	$	—	$	38,647
Net loss, Q2 2023		—		—		—			(130	)		—			—		(130	)
Consolidation of non-controlling interests		—		—		—			—			—			1,872		1,872
Balance at June 30, 2023		5,352,937	$	53	$	46,346		$	(7,302	)	$	(580	)	$	1,872	$	40,389


Balance at December 31, 2021		5,308,973	$	53	$	45,817		$	9,453		$	(580	)	$	—	$	54,743
Net income, Q1 2022		—		—		—			169			—			—		169
Stock-based compensation		—		—		233			—			—			—		233
Balance at March 31, 2022		5,308,973	$	53	$	46,050		$	9,622		$	(580	)	$	—	$	55,145
Net loss, Q2 2022		—		—		—			(1,798	)		—			—		(1,798	)
Stock-based compensation		—		—		70			—			—			—		70
Shares withheld to pay taxes		—		—		(50	)		—			—			—		(50	)
Balance at June 30, 2022		5,308,973	$	53	$	46,070		$	7,824		$	(580	)	$	—	$	53,367

See Accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

~~THE~~The LGL ~~GROUP, INC.~~Group, Inc.

~~CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY - UNAUDITED~~Condensed Consolidated Statements of Cash Flows (Unaudited)

(~~Dollars in Thousands)~~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

2,675,465

$
27

$
29,173

$
(14,726
)

$
(580
)

$
(3
)

$
13,891

Net income

—

—

—

148

—

—

148

Other comprehensive income

—

—

—

—

—

28

28

Subscription rights (Note H)

—

—

—

—

—

—

—

Stock-based compensation

—

—

22

—

—

—

22

Balance at September 30, 2017

2,675,465

$
27

$
29,195

$
(14,578
)

$
(580
)

$
25

$
14,089

	*Six Months Ended June 30,*
	*2023*			*2022*
OPERATING ACTIVITIES
Net income (loss)	$	27		$	(1,629	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation		1			313
Amortization of finite-lived intangible assets		6			38
Stock-based compensation		—			303
Realized loss (gain) on sale of marketable securities		4,316			(112	)
Unrealized (loss) gain on marketable securities		(4,703	)		2,441
Deferred income taxes		18			(589	)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net		170			(44	)
Decrease (increase) in inventories, net		39			(880	)
Decrease in prepaid expenses and other assets		185			168
Decrease in accounts payable, accrued compensation, income taxes and commissions and other		(68	)		(896	)
Net cash used in operating activities		(9	)		(887	)
INVESTING ACTIVITIES
Capital expenditures		—			(395	)
Cash from consolidation of LGL Systems		1,869			—
Proceeds from sale of marketable securities		16,947			1,661
Purchase of marketable securities		—			(7,000	)
Net cash provided by (used in) investing activities		18,816			(5,734	)
FINANCING ACTIVITIES
Payment for taxes related to net share settlement of equity awards		—			(50	)
Prepaid financing costs		—			(20	)
Net cash provided by financing activities		—			(70	)
Decrease in cash and cash equivalents		18,807			(6,691	)
Cash and cash equivalents at beginning of period		21,507			29,016
Cash and cash equivalents at end of period	$	40,314		$	22,325

Supplemental Disclosure:
Income taxes paid	$	134		$	735

See Accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents~~THE LGL GROUP, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED~~

~~(Dollars in Thousands)~~

Nine Months Ended
September 30,

2017

2016

OPERATING ACTIVITIES

Net income (loss)

$
148

$
(78
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation

464

537

Amortization of finite-lived intangible assets

56

50

Gain on disposal of assets

—

(110
)
Stock-based compensation

22

(4
)
Gain on sale of marketable securities

(21
)

—

Bargain purchase gain

—

(4
)
Deferred income tax provision

12

—

Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable, net

267

(450
)
Increase in inventories, net

(269
)

(121
)
Increase in prepaid expenses and other assets

(148
)

(36
)
(Decrease) increase in accounts payable, accrued compensation and commissions
and other accrued liabilities

(345
)

484

Net cash provided by operating activities

186

268

INVESTING ACTIVITIES

Purchase of marketable securities

(1,002
)

—

Acquisition of a business

—

(295
)
Proceeds from sale of marketable securities

34

—

Capital expenditures

(20
)

(112
)
Other

—

43

Net cash used in investing activities

(988
)

(364
)

FINANCING ACTIVITIES

Purchase of treasury stock

—

(4
)
Net cash used in financing activities

—

(4
)

Decrease in cash and cash equivalents

(802
)

(100
)
Cash and cash equivalents at beginning of period

2,778

5,553

Cash and cash equivalents at end of period

$
1,976

$
5,453

Supplemental Disclosure:

Cash paid for interest

$
23

$
17

Cash paid for income taxes

$
26

$
38

~~See Accompanying~~ The LGL Group, Inc.

Notes to Condensed Consolidated Financial ~~Statements.~~Statements (Unaudited)

~~THE LGL GROUP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

A.	~~Subsidiaries~~Basis of ~~the Registrant~~

The LGL Group, Inc. (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 designing, manufacturing and marketing of highly-engineered, ~~highreliability frequency and spectrum control products~~ used to control the frequency or timing of signals in electronic circuits, and in the design of high performance Frequency and Time Reference Standards that form the basis for timing and synchronization in various applications.

~~As of September 30, 2017, the subsidiaries of the Company were as follows:~~

	~~Owned By~~ ~~The LGL~~ ~~Group, Inc.~~		Presentation
~~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 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 first segment, the electronic components segment, is focused on the design and manufacture of highly-engineered, high reliability frequency and spectrum control products. These electronic components ensure reliability and security 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 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.~~accounting principles generally accepted ~~accounting principles~~in the United States (“GAAP”) for interim financial ~~information~~reporting and the instructions to Form ~~10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.~~10-Q. 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 and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, ~~2017.~~

~~This interim~~2023. The information included in this Form 10-Q should be read in conjunction with the ~~audited consolidated financial statements and related notes thereto set forth~~information included in ~~the Company's~~ The LGL Group, Inc. (the “Company”, “LGL Group”, “LGL”, “we”, “our” or “us”)Annual Report on Form ~~10-K~~10-K for the year ended December 31, ~~2016,~~2022 filed with the Securities and Exchange Commission (the ~~"SEC"~~“SEC”) on ~~March 29, 2017,~~April 17, 2023.

The Company was incorporated in 1928 under the laws of the State of Indiana and reincorporated under the laws of the State of Delaware in 2007, and is a diversified holding company engaged in services, investment and manufacturing business activities with subsidiaries engaged in the design, manufacturing and marketing of highly-engineered, high performance Frequency and Time Reference Standards that form the basis for timing and synchronization in various applications.

The Company’s manufacturing business is operated through its subsidiary Precise Time and Frequency, LLC ("PTF"). The Company has operations in Wakefield, Massachusetts.

As part of our ongoing efforts developing our merchant investment segment, the Company took additional steps and solidified its role as ~~amended.~~ the Managing Partner of a syndicated investment partnership. We have pursued opportunities for direct investing for control, direct investing as a minority with the ability to influence such as through Board representation and direct investing to build an industry platform to acquire and build along an industry vertical.

Spin-Off of M-tron Industries, Inc.

On October 7, 2022 the tax-free spin-off of the MtronPTI business was completed and MtronPTI became an independent, publicly traded company trading on the NYSE American under the stock symbol "MPTI".

The ~~accompanying unaudited~~Separation was achieved through LGL’s distribution (the “Distribution”) of 100% of the shares of MtronPTI's common stock to holders of LGL's common stock as of the close of business on the record date of September 30, 2022. LGL's stockholders of record received one-half share of MtronPTI's common stock for every share of LGL's common stock. LGL retained no ownership interest in the MtronPTI business following the Separation. During the first quarter of 2023, MtronPTI agreed to share excess Separation costs of $28,000 with LGL Group, which has been recorded as a reduction of Spin-Off costs, which were $55,000 for the six months ended June 30, 2023, and $232,000 and $343,000 for the three and six months ended June 30, 2022, respectively, and are included in income from discontinued operations, net in the Company’s consolidated statements of operations.

The historical financial results of the MtronPTI business for periods prior to the distribution date along with the related direct costs of the Spin-Off are reflected in the Company’s condensed consolidated financial statements ~~should also~~as discontinued operations. Unless otherwise noted, discussion in these Notes to Consolidated Financial Statements refers to our continuing operations. Refer to Note C – Discontinued Operations, for additional information regarding the discontinued operations.

LGL believes that the spin-off of MtronPTI would enable shareholders to more clearly evaluate the performance and future potential of each entity on a standalone basis, while allowing each to pursue its own distinct business strategy and capital allocation policy. Separating MtronPTI as an independent, publicly owned company positions the business to increase value to both MtronPTI and LGL Group. The spin-off permits each company to tailor its strategic plans and growth opportunities, more efficiently raise and allocate resources, including capital raised through debt or equity offerings, flexibly use its own stock as currency for teammate incentive compensation and potential acquisitions and provide investors a more targeted investment opportunity.

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Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all of its majority-owned subsidiaries along with any variable interest entity (“VIE”) for which it has been determined to be ~~read~~the primary beneficiary. During June 2023, the Company determined it was the primary beneficiary of LGL Systems Acquisition Holdings, LLC ("LGL Systems"), disclosing the non-controlling interest relating to the minority shareholders within its consolidated financial statements. The Company does not consolidate its VIE, LGL Systems Nevada Management Partners, LLC (“LGL Nevada”), as the Company had determined it is not the primary beneficiary, and its economic interest is immaterial. Intercompany transactions and accounts have been eliminated in consolidation. These consolidated financial statements and accompanying notes have been prepared in accordance with GAAP.

The Company consolidates entities in which the Company has a controlling financial interest. The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a variable interest entity (VIE).

A variable interest in a VIE is an investment that will absorb portions of the VIE’s expected losses and/or receive portions of the VIE’s expected residual returns. The Company’s variable interests in VIEs include limited membership interests and common equity.

VIE Consolidation Analysis

The enterprise with a controlling financial interest in a VIE is known as the primary beneficiary and consolidates the VIE. The Company determines whether it is the primary beneficiary of a VIE by performing an analysis that principally considers:

•

Which variable interest holder has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance;

•

Which variable interest holder has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE;

•

The VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders;

•

The VIE’s capital structure;

•

The terms between the VIE and its variable interest holders and other parties involved with the VIE; and

•

Related-party relationships.

The Company reassesses its evaluation of whether an entity is a VIE when certain reconsideration events occur. The Company reassesses its determination of whether it is the primary beneficiary of a VIE on an ongoing basis based on current facts and circumstances. During June 2023, the Company reassessed its determination for LGL Systems and determined it was the primary beneficiary.

Equity-Method Investments: When the Company does not have a controlling financial interest in an entity but can exert significant influence over the entity’s operating and financial policies, the investment is accounted for either (i) under the equity method of accounting or (ii) at fair value by electing the fair value option available under U.S. generally accepted accounting principles (“GAAP”). Significant influence generally exists when the Company owns 20% to 50% of the entity’s common stock or in-substance common stock.

Revenue Recognition

The Company recognizes revenue from the sale of its products in accordance with the criteria in Accounting Standards Codification (“ASC”) 606,Revenue from Contracts with Customers, which are:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

The Company meets these conditions upon the Company’s satisfaction of the performance obligation, usually at the time of shipment to the customer, because control passes to the customer at that time. Our standard terms for customers are net due within 30 days, with a few exceptions, none regularly exceeding 60 days.

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The Company provides disaggregated revenue details by geographic markets in Note K – Domestic and Foreign Revenues.

The Company offers a limited right of return and/or authorized price protection provisions in its agreements with certain electronic component distributors who resell the Company's products to original equipment manufacturers or electronic manufacturing services companies. As a result, the Company estimates and records a reserve for future returns and other charges against revenue at the time of shipment consistent with the terms of sale. The reserve is estimated based on historical experience with each respective distributor. These reserves and charges are immaterial as the Company does not have a history of significant price protection adjustments or returns. The Company provides a standard assurance warranty that does not create a performance obligation.

Practical Expedients:

-	The Company applies the practical expedient for shipping and handling as fulfillment costs.
-	The Company expenses sales commissions as sales and marketing expenses in the period they are incurred.

Impairment of Long-Lived Assets

Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Long-lived assets are grouped with other assets to the lowest level to which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Management assesses the recoverability of the carrying cost of the assets based on a review of projected undiscounted cash flows. If an asset is held for sale, management reviews its estimated fair value less cost to sell. Fair value is determined using pertinent market information, including appraisals or broker's estimates, and/or projected discounted 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.

We performed an assessment to determine if there were any indicators of impairment as a result of the operating conditions resulting at the end of the fiscal quarter ended June 30, 2023. We concluded that, while there were events and circumstances in the macro-environment that did impact us, we did not experience any entity-specific indicators of asset impairment and no triggering events occurred.

Concentration Risks

Our cash and cash equivalents are invested primarily in two U.S. Treasury mutual funds, and the Company believes that there is minimal risk relative to its mutual fund holdings. At June 30, 2023, there were no balances in any financial institution exceeding the FDIC insurance limit of $250,000.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-13, “Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments,” which changes the impairment model for most financial assets. The standard replaces the incurred loss model with the current expected credit loss (“CECL”) model to estimate credit losses for financial assets. The Company adopted the provisions of this standard on January 1, 2023, with minimal effect on its financial statements.

B.	Non-Controlling Interests

During June 2023, the Company was appointed as sole managing member of LGL Nevada and invested approximately $4,000 into LGL Nevada representing its 1% general partnership interest. In conjunction with ~~Management's Discussion~~this transaction, Lynch Capital International, LLC ("Lynch Capital"), the Company's wholly owned subsidiary, invested $1 million into LGL Systems, which is controlled by LGL Nevada. As a result of the subsequent determination that LGL was the primary beneficiary of LGL Systems and ~~Analysis~~was therefore required to consolidate LGL Systems, the Company has recorded $1,872,000 related to non-controlling interests in LGL Systems. This is discussed further in Note E - Related Party Transactions.

Table of ~~Financial Condition and Results of Operations contained in this Quarterly Report on Form 10-Q.~~

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C.	~~Inventories~~Discontinued Operations

~~Inventories are valued at~~

On October 7, 2022, the ~~lower~~Separation of ~~cost or net realizable value using~~MtronPTI was completed. In accordance with ASC 205-20,Presentation of Financial Statements - Discontinued Operations, the ~~FIFO (first-in, first-out) method.~~Company determined that MTronPTI’s business line met the conditions for a discontinued operation and is recorded as such in the consolidated financial statements. The Company ~~reduces~~reports financial results for discontinued operations separately from continuing operations in order to distinguish the ~~value of its inventories to net realizable value when the net realizable value is believed to be less than the cost~~financial impact of the ~~item.~~ disposal transaction from ongoing operations.

The ~~inventory reserve~~following table summarizes the significant line items included in Income from Discontinued Operations, Net of Tax in the Consolidated Statements of Operations for ~~obsolescence as of September~~three and six months ended June 30, ~~2017 and December 31, 2016 was $2,819,000 and $2,773,000, respectively.~~

~~Inventories are comprised of the following~~2022 (in thousands):

September 30,
2017

December 31,
2016

Raw materials

$
1,501

$
1,408

Work in process

1,568

1,306

Finished goods

838

924

Total Inventories, net

$
3,907

$
3,638

	*Three Months Ended*			*Six Months Ended*
	*June 30, 2022*			*June 30, 2022*
Revenues	$	7,064		$	14,755
Manufacturing cost of sales		(4,412	)		(9,231	)
Engineering, selling and administrative		(2,048	)		(3,852	)
Interest expense, net		(2	)		(5	)
Other expense, net		(9	)		(26	)
Income from discontinued operations before income taxes		593			1,641
Income tax provision		136			376
Income from discontinued operations, net of tax	$	457		$	1,265

The cash flows related to discontinued operations have not been segregated, and are included in the Condensed Consolidated Statements of Cash Flows for all periods presented. The following table summarizes depreciation and other significant operating noncash items, capital expenditures and financing activities of discontinued operations for each period presented (in thousands):

	*Six Months Ended*
	*June 30, 2022*
Depreciation	$	313
Amortization of finite-lived intangible assets	$	27
Stock-based compensation expense	$	287
Capital expenditures	$	395

D.	~~Intangible Assets~~Marketable Securities

~~Intangible assets~~

The Company accounts for equity securities under ASC 321. Such securities are ~~recorded~~reported at ~~cost less accumulated amortization which is included~~fair value on the consolidated balance sheets, and the related unrealized gains and losses are reported in ~~engineering, selling and administrative expenses in~~ the ~~accompanying unaudited condensed~~ consolidated statements of ~~operations. Amortization is computed for financial reporting purposes using~~cash flows as non-cash adjustments to income. Any realized and unrealized gains or losses on investment securities are reported in the ~~straight-line method over the estimated useful lives~~consolidated statements of ~~the assets, which range up to 10 years. The intangible assets consist~~operations as investment income or (loss).

Details of ~~intellectual property~~marketable securities held at June 30, 2023 and ~~goodwill. The net carrying value of the amortizable intangible assets was $532,000 and $588,000 as of September 30, 2017 and~~ December 31, ~~2016, respectively. Goodwill, which is not amortizable, was $40,000 as of September 30, 2017 and December 31, 2016.~~

~~The estimated aggregate amortization expense for intangible assets, excluding goodwill, for the remaining portion of 2017 and each of the four succeeding years and thereafter is~~2022 are as follows (in thousands):

					*Cumulative Unrealized*
	*Fair Value*		*Basis*		*Loss*
	*June 30, 2023*
Equity security		25		33		(8	)
	$	25	$	33	$	(8	)

	*December 31, 2022*
198,750 shares of IronNet common stock	$	46	$	4,273	$	(4,227	)
Equity funds and other securities		16,539		17,024		(485	)
	$	16,585	$	21,297	$	(4,712	)

The shares of IRNT common stock were received by the Company as a result of a distribution, with the basis of these securities being determined using the fair value on the date of distribution.

2017
$
19

2018

75

2019

75

2020

75

2021

75

Thereafter

213

Total
$
532

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E.	~~CNB Loan~~Related Party Transactions

~~On September 30, 2016, MtronPTI renewed its Loan Agreement~~

Certain balances held and invested in various mutual funds are managed by a related entity (the ~~“CNB Loan Agreement”~~"Fund Manager") ~~with City National Bank~~. Marc Gabelli, the Company’s non-executive Chairman of ~~Florida (“City National”).~~the Board, who is also a greater than 10% stockholder, serves as an executive officer of the Fund Manager. The ~~CNB Loan Agreement provides for a revolving line~~brokerage and fund transactions in 2023 and 2022 were directed solely at the discretion 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.Company’s management.

As of ~~September~~June 30, ~~2017~~2023, the balance with the Fund Manager totaled $31,980,000, all of which is classified within cash and cash equivalents on the accompanying condensed consolidated balance sheets. Fund management fees earned by the Fund Manager are estimated to be approximately 0.08% of the asset balances under management on an annual basis. All investments including those in related party mutual funds are overseen by the Independent Investment Committee of the Board. The Investment Committee meets regularly to review the alternatives and has determined that the current investments most reflect the company’s objective of lower cost, market return and adherence to having a larger proportion of underlying investments directly in US treasuries.

As of December 31, ~~2016, there was no~~2022, the balance ~~outstanding under~~with the ~~CNB Revolver~~Fund Manager totaled $26,811,000, including $10,295,000 which is classified within cash 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~~cash equivalents on the ~~grant-date fair value of the award~~accompanying condensed consolidated balance sheets and ~~recognizes the cost over the requisite service period, typically the vesting period.~~

~~The Company estimates the fair value of stock options~~$16,516,000 which is classified as marketable securities 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 is indicative of expected volatility over the life of the option. 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.accompanying condensed consolidated balance sheets.

~~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.~~

Compensation expense related to share-based compensation is recognized over the applicable vesting periods. As of September 30, 2017, there was approximately $43,000 of total unrecognized compensation expense related to unvested share-based compensation arrangements that will be recognized over a weighted average period of 1.9 years.

G.	~~Net Income (Loss) Per Share~~

~~The Company computes net income (loss) per share in accordance with Accounting Standards Codification ("ASC") 260,~~ ~~Earnings Per Share~~ ("ASC 260"). Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share adjusts basic income (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 toCertain members of ~~the Company’s~~our board of directors (the “Board”) ~~as a portion~~, including Marc Gabelli, Timothy Foufas, Manjit Kalha and Michael Ferrantino, and three members of ~~their director fees~~our management, Marc Gabelli, Patrick Huvane and Michael Ferrantino, are ~~deemed~~members of LGL Systems.

Transactions with M-tron Industries, Inc.

LGL Group and MtronPTI entered into an Amended and Restated Transitional Administrative and Management Services Agreement, which sets out the terms for services to be ~~participating as defined by ASC 260~~provided between the two companies post-separation. The current terms result in a net monthly payment of $4,000 per month to MtronPTI from LGL Group.

MtronPTI and ~~therefore are included~~LGL Group have agreed to share any excess Separation costs. Included in ~~the computation~~discontinued operations is an amount of ~~basic income (loss) per share.~~

~~For the three and nine months ended September 30, 2017, there were options to purchase 60,135 shares and 105,135 shares, respectively,~~$28,000 which represents 50% of the ~~Company's common stock~~excess Separation costs incurred for the quarter ended March 31, 2023.

At June 30, 2023 and ~~warrants~~December 31, 2022, there was a balance due to ~~purchase 519,241 shares~~LGL Group from MtronPTI of ~~common stock that were excluded from~~$0 and $6,000, respectively, which is included within prepaid expenses and other current assets on the ~~diluted income (loss) per share computation because the impact~~Condensed Consolidated Balance Sheets.

Transactions with LGL Systems Acquisition Holdings, LLC.

LGL Group invested $1 million into LGL Systems during June 2023 through Lynch Capital. LGL Group's $1 million in membership interests represents approximately 35% of the ~~assumed exercise~~membership interests, with approximately $929,000 of ~~such stock options would have been anti-dilutive during the respective periods. For the three~~affiliated membership interests and ~~nine months ended September 30, 2016, there were options to purchase 130,554 shares~~a further $961,000 of unaffiliated membership interests. The affiliated members of LGL Systems include Venator Merchant Fund L.P., which is wholly owned by Marc Gabelli. Other affiliated members include Patrick Huvane, LGL's EVP, Tim Foufas, an LGL Director, and ~~139,902 shares, respectively, of the Company’s common stock~~Manjit Kalha, an LGL Director and warrants to purchase 519,241 shares of common stock that were excluded from the diluted income (loss) per share computation because the impact of the assumed exercise of such stock options and warrants would have been anti-dilutive.

~~The following table reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding for the three and nine months ended September 30, 2017 and 2016:~~

its current audit committee chairman.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Weighted average shares outstanding - basic

2,675,465

2,665,189

2,675,465

2,665,352

Effect of diluted securities

14,446

642

13,079

—

Weighted average shares outstanding - diluted

2,689,911

2,665,831

2,688,544

2,665,352

H.F.	~~Stockholders’ Equity~~

~~Share Repurchase Program~~

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 September 30, 2017, the Company had repurchased a total of 81,584 shares of common stock at a cost of $580,000, which shares are currently held in treasury.

~~Rights Offering~~

~~Pursuant to a Registration Statement on Form S-1 (Registration No. 333-218901) under the~~ ~~Securities Act of 1933, as amended (the "Securities Act"), and declared effective by the SEC on September 5, 2017~~, the Company distributed, at no charge, to the holders of the Company’s common stock, as of September 5, 2017 three transferable subscription rights for each share of common stock then owned (the “Rights Offering”). Each subscription right entitles the holder to purchase one-fourth of a share of common stock at a subscription price of $5.50 per whole share of common stock.

The Rights Offering also includes an over-subscription right, which entitles a stockholder who exercises all of their basic subscription rights in full the right to purchase additional shares of common stock that remain unsubscribed at the expiration of the Rights Offering, subject to availability, at the same $5.50 per whole share subscription price. If the number of unsubscribed shares is not sufficient to satisfy all of the properly exercised over-subscription rights requests, the available shares will be prorated among those who properly exercised over-subscription rights in proportion to their respective basic subscription rights.

The initial subscription period for stockholders to exercise their subscription rights was to expire on October 10, 2017. On October 5, 2017, the Company extended the expiration of the offering period to October 25, 2017, and on October 23, 2017, the Company further extended the expiration of the offering period to November 13, 2017.

The Company estimated the fair value of the subscription rights using the Black-Scholes-Merton option-pricing model. The Black-Scholes-Merton 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. The risk-free interest rate is based on the U.S. Treasury zero-coupon rates with a remaining term comparable to the expected term of the subscription rights. The Company estimated the fair value of the subscription rights to be approximately $10,000 and, because retained earnings were in a deficit position for the three and nine months ending September 30, 2017, it has been recorded as a debit and credit to additional paid in capital with a net impact of $0.

The shares issued in connection with the Rights Offering will be listed on the NYSE American, and the subscription rights are expected to trade on the NYSE American until the day before the expiration of the subscription period.

The Company intends to use the net proceeds from the Rights Offering as additional capital for general corporate purposes and for acquisitions and new business development broadly, including industries and businesses outside the scope of existing operations, although it has not identified any specific acquisitions or business development opportunities at this time.

~~The Company reserves the right to modify, extend, postpone or cancel the Rights Offering at any time prior to the settlement of the sale of the shares in the Rights Offering.~~

~~Warrants~~

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 as 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 the 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."~~

I.	Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value guidance identifies three primary valuation techniques: the market approach, the income approach and the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset.

The fair value hierarchy prioritizes the inputs to 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)1) and the lowest priority to unobservable inputs (Level 3)3). The maximization of observable inputs and the minimization of the use of unobservable inputs are required.

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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 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the 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 management judgment.

Assets

To estimate the market value of its cash and cash equivalents and marketable securities, the Company obtains current market pricing from quoted market sources or uses pricing for identical ~~securities.~~securities adjusted for liquidity, when applicable. Assets measured at fair value on a recurring basis are summarized below (in thousands).

	*Level 1*		*Level 2*		*Level 3*		*Total at June 30, 2023*
Equity Securities	$	25	$	—	$	—	$	25
U.S. Treasury Mutual Funds	$	40,058	$	—	$	—	$	40,058

	*Level 1*		*Level 2*		*Level 3*		*Total at December 31, 2022*
Equity Securities	$	68	$	—	$	—	$	68
Equity Mutual Fund	$	—	$	16,294	$	—	$	16,294
Commodity Mutual Fund	$	—	$	222	$	—	$	222
U.S. Treasury Mutual Funds	$	17,722	$	—	$	—	$	17,722

As of June 30, 2023 and December 31, 2022, the Company had investments in two mutual funds and four mutual funds, respectively. The Equity Mutual Fund noted above was invested in the Gabelli ABC Fund and the Commodity Mutual Fund was invested in the Gabelli Gold Fund. The U.S. Treasury Mutual Funds, included in cash and cash equivalents, are invested in the Gabelli US Treasury Money Market Fund and at December 31, 2022 also included the BlackRock Liquidity Treasury Trust Money Market Fund.

Level 1

Level 2

Level 3

Total
September 30,
2017

Marketable Securities (equity securities)

$
3,787

$
—

$
—

$
3,787

G.	Inventories

Inventories are valued at the lower of cost or net realizable value using the FIFO (first-in, first-out) method. The Company reduces the value of its inventories to net realizable value when the net realizable value is believed to be less than the cost of the item. The reserve for excess and obsolete inventory as of June 30, 2023 and December 31, 2022 was $68,000 and $49,000, respectively.

Inventories are comprised of the following (in thousands):

	*June 30, 2023*		*December 31, 2022*
Raw materials	$	218	$	258
Work in process		8		7
Total Inventories, net	$	226	$	265

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

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H.	Stock-Based Compensation

Under the Company’s 2021 Incentive Plan, and the prior 2011 Incentive Plan, as amended, restricted stock and stock options have been awarded to certain employees as stock-based compensation. Compensation expense is based on the grant-date fair value and recognized over the requisite service period.

In January 2023, 3,750 restricted shares vested. Stock-based compensation expense was $17,000 for the six months ended June 30, 2022. There ~~were~~are no ~~transfers from level 2 to level 3 during the periods presented. There were no level 2~~restricted share or ~~3 assets~~option grants outstanding as of ~~September~~June 30, 2017 or December 31, 2016. The Company also has assets that may be subject to measurement at fair value on a non-recurring basis, including goodwill and intangible assets, and other long-lived assets. There were no liabilities subject to fair value on a non-recurring or recurring basis as of September 30, 2017 and December 31, 2016.2023.

I.	Earnings Per Share

The Company ~~reviews goodwill~~computes earnings per share in accordance with ASC 260,Earnings Per Share. Basic earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share adjusts basic earnings per share for the effects of warrants, restricted stock, stock options and other potentially dilutive financial instruments, only in the ~~carrying value~~periods in which the effects are dilutive.

For both the three and six months ended June 30, 2023, there were warrants to purchase 1,051,664 shares of ~~long-lived assets at least annually or whenever events~~common stock, and ~~circumstances indicate that~~for the ~~carrying amounts~~three and six months ended June 30, 2022, there were options to purchase 25,000 shares of common stock and 56,283 restricted shares which were excluded from the diluted earnings per share computation because the impact of the ~~assets may not be recoverable. If it is determined that~~assumed exercise of such warrants and stock options and vesting of restricted shares would have been anti-dilutive.

The following table reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding for the ~~assets are impaired, the carrying value would be reduced to estimated fair value.~~three and six months ended June 30, 2023 and 2022:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2023*		*2022*		*2023*		*2022*
Weighted average shares outstanding - basic		5,352,937		5,334,187		5,352,937		5,329,080
Effect of diluted securities		—		—		—		—
Weighted average shares outstanding - diluted		5,352,937		5,334,187		5,352,937		5,329,080

J.	~~Segment Information~~Income Taxes

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 are subsidiaries of MtronPTI.

~~Operating~~The Company’s quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the period presented. To determine the annual effective tax rate, the Company estimates both the total income (loss) before income taxes for the full year and the jurisdictions in which that income (loss) is ~~equal~~subject to ~~revenues~~tax. The actual effective tax rate for the full year may differ from these estimates if income (loss) before income taxes is greater than or less ~~cost~~than what was estimated or if the allocation of ~~sales and operating expenses, excluding investment~~ income ~~interest expense, and income taxes.~~(loss) to jurisdictions in which it is taxed is different from the estimated allocations.

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

(in thousands)

(in thousands)

Revenues from Operations

Electronic components

$
5,080

$
5,114

$
16,097

$
15,101

Electronic instruments

182

14

648

14

Total consolidated revenues

$
5,262

5,128

$
16,745

15,115

Operating Income (Loss) from Operations

Electronic components

$
321

$
279

$
1,127

$
617

Electronic instruments

(9
)

(54
)

39

(54
)
Unallocated corporate expense

(311
)

(253
)

(1,013
)

(727
)
Consolidated operating income (loss)

1

(28
)

153

(164
)
Interest expense, net

(6
)

(7
)

(17
)

(20
)
Other income, net

24

67

42

105

Total other income

18

60

25

85

Income (Loss) Before Income Taxes

$
19

$
32

$
178

$
(79
)

K.	~~Domestic and Foreign Revenues~~

~~For~~The effective tax rate on continuing operations for the ~~three~~six months ended ~~September~~June 30, ~~2017~~ 2023 and ~~2016, domestic revenues were $3,979,000~~2022 was 70.0% and ~~$3,779,000, respectively,~~20.7%, respectively. Differences between the Company’s effective income tax rate and ~~foreign revenues were $1,283,000~~the U.S. federal statutory rate are primarily due to the impact from uncertain tax positions, and $1,349,000, respectively. For the nine months ended September 30, 2017 and 2016, domestic revenues were $11,845,000 and $11,033,000, respectively, and foreign revenues were $4,900,000 and $4,082,000, respectively. Significant foreign revenues from operations (10% or more of foreign sales) were as follows:

state taxes.

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

(in thousands)

(in thousands)

Malaysia

$
696

$
694

$
2,284

$
2,202

All other foreign countries

587

655

2,616

1,880

Total foreign revenues

$
1,283

$
1,349

$
4,900

$
4,082

Total domestic revenue

$
3,979

$
3,779

$
11,845

$
11,033

K.	Domestic and Foreign Revenues

The Company allocates its foreign revenue based on the customer's ship-to location. Significant foreign revenues from operations (10% or more of foreign sales) follows (in thousands):

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2023*		*2022*		*2023*		*2022*
Canada	$	47	$	16	$	90	$	49
Spain		236		21		236		31
France		5		—		9		125
Romania		—		55		—		90
All other foreign countries		69		25		76		67
Total foreign revenues	$	357	$	117	$	411	$	362
Total domestic revenue	$	46	$	253	$	433	$	425

Table of Contents

L.	~~Commitments and Contingencies~~Segment Information

The Company has identified two reportable business segments: electronic instruments, which includes all products manufactured and sold by PTF, and merchant investment, which includes all the income and expenses through its subsidiary Lynch Capital.

Income (loss) from operations is equal to revenues, interest income, and investment income (loss) less manufacturing cost of sales and engineering, selling and administrative expenses. Identifiable assets of the segments are those used in each of their respective operations. Total assets of $41,579,000 includes $22,925,000 for the merchant investment business, $1,221,000 for the electronic instruments business, and $17,353,000 for the holding company. Holding company represents general corporate assets which are principally cash and cash equivalents, short-term investments and certain other investments and receivables along with deferred tax balances.

	*For the Three Months Ended June 30, 2023*												*For the Three Months Ended June 30, 2022*
	*Electronic Instruments*			*Merchant Investment*			*Holding Company*			*Consolidated*			*Electronic Instruments*			*Merchant Investment*		*Holding Company*			*Consolidated*
REVENUES	$	403		$	—		$	—		$	403		$	370		$	—	$	—		$	370
Interest income, net		—			255			20			275			—			—		9			9
Investment income (loss)		—			—			43			43			—			—		(2,373	)		(2,373	)
Costs and expenses:
Manufacturing cost of sales		(208	)		—			—			(208	)		(227	)		—		—			(227	)
Engineering, selling and administrative		(173	)		(88	)		(372	)		(633	)		(165	)		—		(458	)		(623	)
Other expense, net		—			—			(12	)		(12	)		—			—		1			1
INCOME (LOSS) FROM OPERATIONS	$	22		$	167		$	(321	)	$	(132	)	$	(22	)	$	—	$	(2,821	)	$	(2,843	)

	*For the Six Months Ended June 30, 2023*												*For the Six Months Ended June 30, 2022*
	*Electronic Instruments*			*Merchant Investment*			*Holding Company*			*Consolidated*			*Electronic Instruments*			*Merchant Investment*		*Holding Company*			*Consolidated*
REVENUES	$	844		$	—		$	—		$	844		$	787		$	—	$	—		$	787
Interest income, net		—			255			218			473			—			—		5			5
Investment income (loss)		—			—			388			388			—			—		(2,328	)		(2,328	)
Costs and expenses:
Manufacturing cost of sales		(400	)		—			—			(400	)		(469	)		—		—			(469	)
Engineering, selling and administrative		(350	)		(88	)		(753	)		(1,191	)		(332	)		—		(1,313	)		(1,645	)
Other expense, net		—			—			(24	)		(24	)		—			—		2			2
INCOME (LOSS) FROM OPERATIONS	$	94		$	167		$	(171	)	$	90		$	(14	)	$	—	$	(3,634	)	$	(3,648	)

M.	Contingencies

In the ordinary 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.

Table of Contents

M.Item 2.

~~Related Party Transactions~~

As of September 30, 2017 and December 31, 2016, approximately $3,778,000 and $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 fund 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 an executive officer of the Fund Manager. The fund transactions for the nine months ended September 30, 2017 and for the year-ended December 31, 2016 were directed solely at the discretion of the Company’s management.

In August 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, “Statement of Cash Flows – (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. ASU 2016-15 is effective for fiscal years, and for interim periods within those years, beginning after December 15, 2017. Early application is permitted. The Company is currently evaluating the potential effect of ASU 2016-15 on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, "Compensation – Stock Compensation (Topic 718): Improvements to Employee Share–Based Payment Accounting" ("ASU 2016-09"). ASU 2016-9 simplifies the accounting for share–based payment award transactions including: income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The adoption of ASU 2016–09 did not ~~have a material impact on the Company’s consolidated financial statements.~~

In February 2016, the FASB issued ASU No. 2016–02, "Leases (Topic 842)" (“ASU 2016-02”). The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods and is to be applied utilizing a modified retrospective approach. The Company does not expect this standard to have a material impact on its consolidated financial statements because there are no material operating leases.

~~In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities~~(Topic 825)" ("ASU 2016-01"). ASU 2016-01 revises the classification and measurement of investments in certain equity investments and the presentation of certain fair value changes for certain financial liabilities measured at fair value. ASU No. 2016-01 requires the change in fair value of many equity investments to be recognized in net income. ASU 2016-01 is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. Adopting ASU 2016-01 may result in a cumulative effect adjustment to the Company's retained earnings as of the beginning of the year of adoption. The Company is currently evaluating the potential effects of adopting the provisions of ASU 2016-01.

In November 2015, the FASB issued ASU No. 2015-17 "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes" (ASU 2015-17”) which simplifies the presentation of deferred income taxes. Under the new accounting standard, deferred tax assets and liabilities are required to be classified as noncurrent, eliminating the prior requirement to separate deferred tax assets and liabilities into current and noncurrent. The adoption of ASU 2015-17 did not have a material impact on the Company’s consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern" ("ASU 2014-15"), which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company has adopted ASU 2014-15 as of December 31, 2016 and it did not have a material impact on the Company’s financial statements.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers” ("ASU 2014-09"), also known as the "New Revenue Standard." This update is the result of a collaborative effort by the FASB and the International Accounting Standards Board to simplify revenue recognition guidance, remove inconsistencies in the application of revenue recognition, and to improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to receive for those goods or services. The New Revenue Standard is applied through the following five-step process:

~~4. Allocate the transaction price to the performance obligations in the contract.~~

~~5. Recognize revenue when (or as) the entity satisfies a performance obligation.~~

~~For a public entity, this update is effective for annual and interim reporting periods beginning after December 15, 2017~~ ~~with early adoption permitted~~. This standard can be applied on either a retrospective or modified retrospective approach. Through the course of 2016, a number of ASU's had been issued which further refine the original guidance issued under ASU 2014-09 and are effective in conjunction with this original standard.

We have established an implementation approach to assess the impact of the new revenue guidance on our operations, consolidated financial statements and related disclosures. To date, this assessment has included (1) performing contract analyses for each revenue stream identified, (2) assessing the noted differences in recognition and measurement that may result from adopting this new standard, (3) performing detailed analyses of contracts with large customers, and (4) performing transaction level testing for consistency with contract provisions that affect revenue recognition. Based on the preliminary results of the evaluation, which is still in process, nothing has come to our attention that would indicate that adoption of the new standard will have a material impact on our consolidated financial statements.

Further, we are in the process of evaluating and designing the necessary changes to our business processes, policies, systems and controls to support recognition and disclosure under the new standard. Further, we are continuing to assess what incremental disaggregated revenue disclosures will be required in our consolidated financial statements.

No other new accounting pronouncements issued or effective during the nine months ended September 30, 2017 have had or are expected to have a material impact on the Company's consolidated financial statements.

The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements, the notes thereto and the other unaudited financial data included in this Quarterly Report on Form 10-Q. The following discussion should also be read in conjunction with the audited consolidated financial statements and the notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2022, as ~~amended.~~filed with the SEC on April 17, 2023. The terms ~~“we,” “us,” “our,” and~~ the “Company”, “LGL Group”,“LGL”, “we”, “our” or “us” refer to The LGL Group, Inc. and unless otherwise defined herein, capitalized terms used herein shall have the same meanings as set forth in our condensed consolidated financial statements and the notes thereto.

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 be considered forward-looking statements 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,"~~"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, ~~2016,~~2022, filed with the SEC on ~~March 29, 2017, as amended,~~April 17, 2023, 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 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.

The Company is a holding company engaged in services, investment and manufacturing business activities. The Company was incorporated in 1928 under the laws of ~~Operations~~the State of Indiana, and in 2007, the Company was reincorporated under the laws of the State of Delaware as The LGL Group, Inc. We maintain our executive offices at 2525 Shader Road, Orlando, Florida 32804. Our telephone number is (407) 298-2000. Our Internet address is www.lglgroup.com. Our common stock and warrants are traded on the NYSE American (“NYSE”) under the symbols "LGL" and “LGL WS”, respectively.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all of its majority-owned subsidiaries along with any variable interest entity (“VIE”) for which it has been determined to ~~three months ended September 30, 2016~~be the primary beneficiary. During June 2023, the Company determined it was the primary beneficiary of LGL Systems Acquisition Holdings, LLC ("LGL Systems"), disclosing the non-controlling interest relating to the minority shareholders within its consolidated financial statements. The Company does not consolidate its VIE, LGL Systems Nevada Management Partners, LLC (“LGL Nevada”), as the Company had determined it is not the primary beneficiary, and its economic interest is immaterial.

We operate our electronic instruments business currently through our subsidiary, Precise Time and ~~Backlog~~Frequency, LLC ("PTF"), a globally positioned producer of industrial Electronic Instruments and commercial products and services. Founded in 2002, PTF operates from our design and manufacturing facility in Wakefield, Massachusetts.

PTF is our sole wholly owned manufacturing operation and 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 including satellite communication, time transfer systems, network synchronization, electricity distribution and metrology.

The LGL investment business is comprised of various investment vehicles in which LGL is either shareholder, partner, or has general partner interests, and through which LGL invests its capital. The Company seeks to invest available cash and cash equivalents in liquid investments with a view to enhancing returns as we continue to assess further acquisitions of, or investments in, operating businesses broadly. LGL core strengths include identifying and acquiring undervalued assets and businesses, often through the ~~three months ended September 30, 2017 were $5,262,000, an increase~~purchase of ~~$134,000,~~securities, increasing value through management, financial or ~~2.6%~~other operational changes, and managing complex legal, regulatory or financial issues, which may include technical, engineering, environmental, zoning, permitting and licensing issues among others.

During June 2023, LGL Group transferred approximately $21.0 million of cash and cash equivalents to its wholly owned subsidiary, Lynch Capital International, LLC ("Lynch Capital"), ~~from revenues~~for its use within the investment business. During June 2023, Lynch Capital was appointed as sole managing member of ~~$5,128,000 for the three months ended September 30, 2016. Revenue growth was negatively impacted by Hurricane Irma, which resulted in lost production days for our Orlando facility.~~

~~Consolidated gross margin,~~LGL Nevada and invested approximately $4,000 into LGL Nevada representing its 1% general partnership interest. In conjunction with this transaction, Lynch Capital invested $1 million into LGL Systems, which is controlled by LGL Nevada. As a result of the subsequent determination that LGL was the primary beneficiary of LGL Systems and was therefore required to consolidate LGL Systems, the Company has recorded $1,872,000 related to non-controlling interests in LGL Systems on its consolidated ~~revenues less manufacturing cost~~balance sheets.

LGL Group invested $1 million into LGL Systems during June 2023 through Lynch Capital, with its $1 million in membership interests representing approximately 35% of ~~sales, as~~all membership interests, including approximately $929,000 of affiliated membership interests and a ~~percentage~~further $961,000 of ~~revenues decreased to 33.2% for the three months ended September 30, 2017, from 34.6% for the three months ended September 30, 2016.~~unaffiliated membership interests. The affiliated members of LGL Systems include Venator Merchant Fund L.P., which is wholly owned by Marc Gabelli. Other affiliated members include Patrick Huvane, LGL's EVP, Tim Foufas, an LGL Director, and Manjit Kalha, an LGL Director and its current audit committee chairman.

As of June 30, 2023, LGL had investments (classified within Cash and cash equivalents and Marketable securities) with a fair value of approximately $37.8 million, of which $22.9 million was held directly by Lynch Capital for the investment business. The Company accounts for its Marketable securities under ASC 321 and as such, its Marketable securities are reported at fair value on its consolidated balance sheets.

On October 7, 2022, the separation of M-tron Industries, Inc. (“MtronPTI”) was completed (the “Separation”) and MtronPTI became an independent, publicly traded company trading on the NYSE American under the stock symbol "MPTI."

The Separation was achieved through LGL’s distribution (the “Distribution”) of 100% of the shares of the MtronPTI's common stock to holders of LGL's common stock as of the close of business on the record date of September 30, ~~2017,~~2022. LGL's stockholders of record received one-half share of MtronPTI's common stock for every share of LGL's common stock. LGL retained no ownership interest in the MtronPTI business following the Separation. The historical financial results of the MtronPTI business for periods prior to the distribution date are reflected in the Company’s consolidated financial statements as discontinued operations.

See Note A – Basis of Presentation in the accompanying notes to the condensed consolidated financial statements for further details of the Separation.

As of June 30, 2023, our order backlog was ~~$9,917,000, which is~~$324,000, a decrease of ~~8.8% when~~10.0% from $360,000 at December 31, 2022 and an increase of 114.6% compared to the ~~back log~~backlog of ~~$10,877,000~~$151,000 as of June 30, ~~2017, and a decrease of 10.0% when compared to a backlog of $11,017,000 as of September 30, 2016.~~ ~~The decline was primarily due to the push out of a three year contract from the third quarter to the fourth quarter.~~ 2022. 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~~ likely to be fulfilled largely in the next 12 ~~months.~~

months but usually will ship within the next 90 days. Order backlog is adjusted quarterly to reflect project cancellations, deferrals, and revised project scope and cost, ~~and sales of subsidiaries,~~ if any. ~~We expect~~

Three months ended June 30, 2023 compared to ~~fill our entire order backlog within the next twelve~~three months ~~but cannot provide assurances as to what portion of the order backlog will be fulfilled in a given year.~~ended June 30, 2022

Total revenues were $403,000 for the three months ended ~~September~~June 30, ~~2017 was an improvement~~2023, or 8.9% above revenues of ~~$29,000 from an operating loss of ($28,000)~~$370,000 for the three months ended ~~September~~June 30, ~~2016. This was due to a decrease in engineering, selling and administrative costs that partially offset the decline in gross margin.~~2022.

For the three months ended September 30, 2017, other income, net was $24,000 compared to $67,000 for the three months ended September 30, 2016. The current period other income, net consists of a $21,000 gain realized on the sale of marketable securities and $4,000 of foreign currency transaction gains on settled transactions, offset by ($1,000) of other expense. The prior period other income, net consists of $74,000 of net insurance proceeds received for damaged equipment and inventory and a $4,000 bargain purchase gain resulting from the purchase of PTF, offset by ($10,000) of legal settlement fees and a ($1,000) foreign currency transaction loss on settled transactions,.

~~We recorded a tax provision of ($2,000) and $0 for the three months ended September 30, 2017 and 2016, respectively.~~

~~Based on our assessment of the uncertainty surrounding the realization of the favorable tax attributes in future tax returns in accordance with the provisions of ASC 740,~~ ~~Income Taxes~~, we have determined that it is more likely than not that deferred tax assets generated from foreign net operating losses (“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 against the remaining U.S net deferred tax assets is required and have recorded a valuation allowance to reduce deferred tax 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, we will adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.

Net income for the three months ended September 30, 2017, was $17,000 compared to $32,000 for the three months ended September 30, 2016. Basic and diluted net income per share for the three months ended September 30, 2017 and 2016 was $0.01.

For the three months ended September 30, 2017 and 2016, stock-based compensation expense was $7,000 and $8,000, respectively. Compensation expense related to stock-based compensation is recognized over the applicable vesting periods. As of September 30, 2017, there was approximately $43,000 of total unrecognized compensation expense related to unvested stock-based compensation arrangements.

~~Nine months ended September 30, 2017 compared to nine months ended September 30, 2016~~

Total revenues for the nine months ended September 30, 2017 were $16,745,000, an increase of $1,630,000, or 10.8%, from revenues of $15,115,000 for the nine months ended September 30, 2016. Approximately 60.0% of the increase is being driven by management’s strategy to move away from low margin commodities business and focus on achieving revenue growth through the development of more complex, higher margin products, particularly in the Aero/Defense market segment. The remaining 40.0% of the increase is being driven by PTF, which we acquired in September 2016.

Consolidated gross margin, which is consolidated revenues less manufacturing cost of sales as a percentage of revenues, increased ~~modestly~~ to ~~33.9%~~48.4% for the ~~nine~~three months ended ~~September~~June 30, ~~2017~~2023, from ~~33.4%~~38.6% for the ~~nine~~three months ended ~~September~~June 30, ~~2016.~~2022 reflecting the effects of product mix changes.

Engineering, selling and administrative expense (“ES&A”) costs of $633,000 for the three months ended June 30, 2023 includes ES&A expenses of LGL’s operating subsidiary Precise Time and Frequency, LLC (“PTF”) totaling $173,000, $372,000 for LGL’s corporate ES&A, and $88,000 for Lynch Capital's investment ES&A. In the three months ended June 30, 2022, PTF had ES&A of $165,000, with the remaining $458,000 representing LGL’s corporate ES&A.

The Company reported an operating loss of $438,000 for the ~~nine~~three months ended ~~September~~June 30, ~~2017~~2023, compared to an operating loss of ~~($164,000)~~$480,000 for the ~~nine~~three months ended ~~September~~June 30, ~~2016.~~2022. The improvement reflects the impact from higher margins and a slight reduction in administrative costs.

The Company reported $275,000 of interest income during the three months ended June 30, 2023 compared to interest income of $9,000 during the three months ended June 30, 2022. The income during the three months ended June 30, 2023 was related to higher interest rates on the Company’s cash and cash equivalents which are invested in short-term treasury mutual funds.

The Company reported $43,000 of investment income during the three months ended June 30, 2023 compared to a loss of $2,373,000 during the three months ended June 30, 2022. The income during the three months ended June 30, 2023 was related to performance on the Company’s investment portfolio, with the prior year loss for the three months ended June 30, 2022 being related almost entirely to the Company's investment in IronNet.

Total other income (expense), net was income of $306,000 for the three months ended June 30, 2023, compared to expense of $2,363,000 for the three months ended June 30, 2022 which increased significantly due to the ~~10.8% increase in revenue~~interest and ~~the modest increase in gross margin.~~

~~For the nine months ended September 30, 2017, other~~investment income ~~net was $42,000~~as shown above, as compared to ~~$105,000 for~~ the ~~nine months ended September 30, 2016. The current period consists~~prior year which was the result of $25,000 of foreign currency transaction gains on settled transactions and a $21,000 of gain on the sale of marketable securities, offset by other expenses. The prior period consists of $118,000 of net insurance proceeds received for damaged equipment and inventory and a $4,000 bargain purchase gain resulting from the acquisition of PTF offset by ($10,000) of legal settlement fees and a ($7,000) loss on the disposal of equipment.an investment loss.

We recorded a tax ~~provision~~benefit of ~~($30,000)~~$2,000 and $588,000 for the three months ended June 30, 2023 and 2022, respectively. The benefit is based on an estimated annual effective tax rate across the jurisdictions in which we operate.

Income from discontinued operations, net of tax was $457,000 for the three months ended June 30, 2022. These amounts represent the income which was formerly earned by the discontinued operation less the costs directly related to the spin-off and is presented net of the related tax effect.

Net loss was $130,000 compared to $1,798,000 for the three months ended June 30, 2022. The loss in 2023 was primarily due to corporate ES&A exceeding the investment income, as noted above. For 2022, the net loss resulted primarily from the investment loss. Basic and diluted net loss per share for the three months ended June 30, 2023 and 2022 was $0.02 and $0.34, respectively.

Six months ended June 30, 2023 compared to six months ended June 30, 2022

Total revenues were $844,000 for the six months ended June 30, 2023, or 7.2% above revenues of $787,000 for the six months ended June 30, 2022.

Consolidated gross margin, which is consolidated revenues less manufacturing cost of sales as a percentage of revenues, increased to 52.6% for the six months ended June 30, 2023, from 40.4% for the six months ended June 30, 2022 reflecting the effects of product mix changes.

Engineering, selling and administrative expense (“ES&A”) costs of $1,191,000 for the six months ended June 30, 2023 includes ES&A expenses of LGL’s operating subsidiary Precise Time and Frequency, LLC (“PTF”) totaling $350,000 and $753,000 for LGL’s corporate ES&A, and $88,000 for Lynch Capital's investment ES&A. In the six months ended June 30, 2022, PTF had ES&A of $332,000, with the remaining $1,313,000 representing LGL’s corporate ES&A. The decrease of $454,000 in ES&A primarily relates to the compensation and related costs for former LGL executives who now are compensated by M-tron Industries, Inc. following its spin-off from LGL on October 7, 2022.

The Company reported an operating loss of $747,000 for the six months ended June 30, 2023, compared to an operating loss of $1,327,000 for the six months ended June 30, 2022. The improvement reflects the impact from higher revenue and margins and the significant reduction in administrative costs due primarily to the Spin-Off of MtronPTI.

The Company reported $473,000 of interest income during the six months ended June 30, 2023 compared to interest income of $5,000 during the six months ended June 30, 2022. The income during the six months ended June 30, 2023 was related to higher interest rates on the Company’s cash and cash equivalents which are invested in short-term treasury mutual funds.

The Company reported $388,000 of investment income during the six months ended June 30, 2023 compared to a loss of $2,328,000 during the six months ended June 30, 2022. The income during the six months ended June 30, 2023 was related to performance on the Company’s investment portfolio, with the prior year loss for the six months ended June 30, 2022 being related almost entirely to the Company's investment in IronNet.

Total other income (expense), net was income of $837,000 for the six months ended June 30, 2023, compared to expense of $2,321,000 for the six months ended June 30, 2022 which related primarily to the interest and investment income or loss as shown above.

We recorded a tax expense of $63,000 and benefit of ~~$1,000~~$754,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively. The (benefit) expense is based on an estimated annual effective tax rate across the jurisdictions in which we operate.

Income from discontinued operations, net of tax was $1,265,000 for the six months ended June 30, 2022. These amounts represent the income which was formerly earned by the discontinued operation less the costs directly related to the spin-off and is presented net of the ~~uncertainty surrounding the realization of the favorable~~related tax ~~attributes in future tax returns in accordance with the provisions 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 against the remaining U.S net deferred tax assets is required and have recorded a valuation allowance to reduce deferred tax 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, we will adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.effect.

Net income ~~for the nine months ended September 30, 2017~~ was ~~$148,000~~$27,000 compared to a loss of $1,629,000 for the six months ended June 30, 2022. The income in 2023 was primarily due to the increase in investment income, as noted above. For 2022, the net loss ~~of ($78,000) for~~resulted from the ~~nine months ended September 30, 2016.~~investment performance. Basic and diluted net income ~~(loss)~~ per share for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 was ~~$0.06~~income of $0.01 and ~~($0.03),~~loss of $0.31, respectively.

For the nine months ended September 30, 2017 stock-based compensation expense was $22,000. For the nine months ended September 30, 2016, stock-based compensation expense was ($4,000) due to the effect of forfeitures. Compensation expense related to stock-based compensation is recognized over the applicable vesting periods. As of September 30, 2017, there was approximately $43,000 of total unrecognized compensation expense related to unvested stock-based compensation arrangements.

As of ~~September~~June 30, ~~2017~~2023 and ~~2016,~~December 31, 2022, cash and cash equivalents were ~~$1,976,000~~$40,314,000 and ~~$2,778,000,~~$21,507,000, respectively. ~~In December 2016~~

Cash used in operating activities for the six months ended June 30, 2023 and ~~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.~~2022 was $9,000 and $887,000, respectively.

Cash provided by ~~operating~~(used in) investing activities ~~was $186,000 and $268,000~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016, respectively. The $82,000 decrease~~2022 was ~~due primarily to a year-over-year increase in non-cash adjustments for depreciation, stock-based compensation, gain on disposal of assets, gain on disposal of marketable securities~~$18,816,000 provided by and ~~a deferred tax benefit totaling $64,000, and a year-over year change in working capital accounts of ($372,000) offset by an improvement in net income (loss) of $226,000.~~

~~Cash~~$5,734,000 used in investing activities, respectively. The amount shown for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 reflects the sale of 198,500 IRNT shares for $61,000. During the second quarter of 2023, we sold substantially all of our investments and 2016 was ($988,000) and ($364,000), respectively. The increase in the use of cash was primarily due to the transfer of certain cash equivalents to equity securities; offset partially by, PTF acquisition costs incurred in 2016 and a $92,000 reduction in capital expenditures. In addition, insurance proceeds decreased by $43,000 compared with 2016.placed them into money market securities.

~~For the nine months ended September 30, 2017, there were no financing activities. For the nine months September 30, 2016 there was a ($4,000) use of cash to purchase treasury stock.~~

As of ~~September~~June 30, ~~2017,~~2023, our consolidated working capital was ~~$10,711,000~~$40,701,000 compared to ~~$10,135,000~~$38,753,000 as of December 31, ~~2016.~~2022. As of ~~September~~June 30, ~~2017,~~2023, we had current assets of ~~$13,121,000,~~$41,204,000, current liabilities of ~~$2,410,000~~$503,000 and a ratio of current assets to current liabilities of ~~5.44:1.00~~81.92 to 1.00. As of December 31, ~~2016~~2022, we had current assets of ~~$12,890,000,~~$39,340,000, current liabilities of ~~$2,755,000~~$587,000 and a ratio of current assets to current liabilities of ~~4.68:~~67.02 to 1.00. Management continues to focus on efficiently managing working capital requirements to match operating activity ~~levels.~~levels and will seek to deploy the Company’s working capital where it will generate the greatest returns.

On September 30, 2016, MtronPTI renewed the CNB Loan Agreement with City National. The CNB Loan Agreement provides for the CNB Revolver in the amount of $3.0 million, 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, 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. Our 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. As of September 30, 2017 and December 31, 2016, there was no balance outstanding under the CNB Revolver and no associated restricted cash.

We believe that existing cash and cash equivalents, marketable securities and cash generated from operations will beprovide sufficient liquidity to meet our ongoing working capital and capital expenditure requirements for the next 12 ~~months. However, we may seek additional capital to fund future growth in its business, to provide flexibility to respond to dynamic market conditions, or to fund our strategic growth objectives.~~ months from the date of this filing.

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.

Our ~~accounting policies and unaudited~~accompanying condensed consolidated financial statements ~~have been established to conform with GAAP. The preparation of financial statements~~are prepared in conformity with GAAP, which requires usmanagement to ~~use judgment in the application of accounting policies, including making~~make estimates and ~~assumptions. These judgments~~assumptions that affect the amounts reported ~~amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the~~in our financial statements and ~~the reported amounts of revenue~~accompanying footnotes. These estimates are made and ~~expenses during the reporting periods. We believe we have made these estimates and assumptions in~~evaluated on an ~~appropriate manner and in a way~~on-going basis using information that ~~accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using historical knowledge of the business,~~is currently available as well as various other ~~factors,~~assumptions believed to ~~ensure that they are~~be reasonable ~~for reporting purposes. However, actual~~under the circumstances. Actual results ~~may~~could differ from ~~these~~those estimates, perhaps in material adverse ways, and ~~assumptions. We believe that~~those estimates could be different under different assumptions or conditions. For a discussion of the accounting policies related to the following accounts or activities are those that are most critical to the portrayal of our financial condition and results of operations and require the more significant judgments and estimates:

~~There have been no significant changes to our~~Company’s critical accounting ~~policies from those described~~estimates, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in ~~Note A – Accounting and Reporting Policies to the consolidated financial statements in the Company's~~our Annual Report on Form 10-K for the year ended December 31, ~~2016, as amended.~~2022.

We doare not aware of any material trends or uncertainties, other than national economic conditions affecting our industry generally, that may reasonably be expected to have ~~any off-balance sheet arrangements.~~a material impact, favorable or unfavorable, on our revenues or income other than those listed below and those listed in Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on April 17, 2023.

Inflation and ~~Qualitati~~~~ve Disclosures About Market Risk.~~Rising Interest Rates

During 2022, inflation in the United States accelerated and, as of the date of this Report, is currently expected to continue at an elevated level in the near-term. Rising inflation may have an adverse impact on our manufacturing cost of sales along with engineering, selling and administrative expenses, as these costs could increase at a rate higher than our revenue. The U.S. Federal Reserve raised the federal funds rate a total of seven times throughout 2022, and four times in 2023, resulting in a current range from 5.25% to 5.50% as of the filing date of this Quarterly Report on Form 10-Q. It is expected that the Federal Reserve will continue to increase the federal funds rate throughout 2023 to, among other things, control inflation. Rising interest rates are expected to benefit LGL due to a significant portion of its portfolio currently being invested in US treasury mutual funds.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. ~~In designing and evaluating~~Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the ~~disclosure~~risk that controls ~~and~~may become inadequate because of changes in conditions, or that the degree of compliance with the policies or 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.may deteriorate.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of ~~September~~June 30, ~~2017~~2023 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 our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures, as of ~~September~~June 30, ~~2017,~~2023, were ~~effective at the reasonable assurance level.~~effective.

There were no changes in ~~our~~the Company’s internal ~~controls~~control over financial reporting during the ~~fiscal~~ quarter ended ~~September~~June 30, ~~2017, or in other factors~~2023 that ~~could significantly affect these controls, that~~have materially affected, or are reasonably likely to materially affect, ~~our~~the Company’s internal ~~controls~~control over financial reporting.

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 or our subsidiaries are a party or to which our properties are subject.


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~~3.4		~~Warrant Agreement, dated as of July 30, 2013, by and among~~ The LGL Group, Inc.~~, Computershare Inc. and Computershare Trust Company, N.A.~~ Amendment No. 2 to By-Laws (incorporated by reference to Exhibit ~~4.1~~3.1 to the Company's ~~Quarterly~~Current Report on Form ~~10-Q~~8-K filed with the SEC on ~~August 14, 2013)~~February 21, 2020).
~~4.2~~3.5		~~Form of Subscription and Information Agent Agreement by and between~~ The LGL Group, Inc. ~~and Broadridge Corporate Issuer Solutions, Inc.~~Amendment No. 3 to By-Laws (incorporated by reference to Exhibit ~~4.2 to Amendment No. 1~~3.1 to the ~~Company’s Registration Statement~~Company's Current Report on Form ~~S-1 (File No. 333-218901)~~8-K filed with the SEC on ~~August 21, 2017)~~February 26, 2020).
~~4.3~~3.6		~~Form~~The LGL Group, Inc. Certificate of ~~Transferable Subscription Rights~~Amendment to Certificate of Incorporation (incorporated by reference to Exhibit ~~4.3 to Amendment No. 1~~3.1 to the Company’s ~~Registration Statement~~Current Report on Form ~~S-1 (File No. 333-218901)~~8-K filed with the SEC on ~~August 21, 2017)~~January 4, 2022).
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*		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*		Inline XBRL Taxonomy Extension Schema Document


101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101

	THE LGL GROUP, INC.


Date: ~~November 6, 2017~~August 14, 2023	By:	/s/ ~~Michael~~Mike J. Ferrantino ~~Sr.~~
			~~Michael~~Mike J. Ferrantino ~~Sr.~~
			~~President and Chief~~Co-Chief Executive Officer (Principal Executive Officer)


Date: ~~November 6, 2017~~August 14, 2023	By:	/s/ ~~Patti A. Smith~~James W. Tivy
			~~Patti A. Smith~~James W. Tivy
		Chief ~~Financial~~Accounting Officer (Principal Financial ~~and Accounting~~ Officer)

	September 30, 2017			December 31, 2016
	(Unaudited)			(Audited)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,976		$	2,778
Marketable securities		3,787			2,770
Accounts receivable, net of allowances of $27 and $31, respectively		3,237			3,504
Inventories, net		3,907			3,638
Prepaid expenses and other current assets		214			200
Total Current Assets		13,121			12,890
Property, plant and equipment:
Land		536			633
Buildings and improvements		3,973			3,966
Machinery and equipment		16,959			16,849
Gross property, plant and equipment		21,468			21,448
Less: accumulated depreciation		(19,201	)		(18,737	)
Net property, plant, and equipment		2,267			2,711
Intangible assets, net		572			628
Deferred income taxes, net		202			214
Other assets, net		337			203
Total Assets	$	16,499		$	16,646

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	1,278		$	1,525
Accrued compensation and commissions		881			942
Other accrued expenses		251			288
Total Current Liabilities		2,410			2,755
Commitments and Contingencies (Note L)
Stockholders’ Equity
Common stock, $0.01 par value - 10,000,000 shares authorized; 2,757,049 shares issued and 2,675,465 shares outstanding at September 30, 2017 and December 31, 2016		27			27
Additional paid-in capital		29,195			29,173
Accumulated deficit		(14,578	)		(14,726	)
Treasury stock, 81,584 shares held in treasury at cost at September 30, 2017 and December 31, 2016		(580	)		(580	)
Accumulated other comprehensive income (loss)		25			(3	)
Total Stockholders' Equity		14,089			13,891
Total Liabilities and Stockholders' Equity	$	16,499		$	16,646

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
REVENUES	$	5,262		$	5,128		$	16,745		$	15,115
Costs and expenses:
Manufacturing cost of sales		3,513			3,353			11,063			10,069
Engineering, selling and administrative		1,748			1,803			5,529			5,210
OPERATING INCOME (LOSS)		1			(28	)		153			(164	)
Other Income (Expense):
Interest expense, net		(6	)		(7	)		(17	)		(20	)
Other income, net		24			67			42			105
Total Other Income		18			60			25			85
INCOME (LOSS) BEFORE INCOME TAXES		19			32			178			(79	)
Income tax (provision) benefit		(2	)		—			(30	)		1
NET INCOME (LOSS)	$	17		$	32		$	148		$	(78	)

Basic per share information:
Weighted average shares outstanding		2,675,465			2,665,189			2,675,465			2,665,352
Net income (loss)	$	0.01		$	0.01		$	0.06		$	(0.03	)

Diluted per share information:
Weighted average shares outstanding		2,689,911			2,665,831			2,688,544			2,665,352
Net income (loss)	$	0.01		$	0.01		$	0.06		$	(0.03	)

	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		2,675,465	$	27	$	29,173	$	(14,726	)	$	(580	)	$	(3	)	$	13,891
Net income		—		—		—		148			—		—				148
Other comprehensive income		—		—		—		—			—			28			28
Subscription rights (Note H)		—		—		—		—			—			—			—
Stock-based compensation		—		—		22		—			—			—			22
Balance at September 30, 2017		2,675,465	$	27	$	29,195	$	(14,578	)	$	(580	)	$	25		$	14,089

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Weighted average shares outstanding - basic		2,675,465		2,665,189		2,675,465		2,665,352
Effect of diluted securities		14,446		642		13,079		—
Weighted average shares outstanding - diluted		2,689,911		2,665,831		2,688,544		2,665,352

	Historical LGL (as reported)			Discontinued Operations (A)			Pro Forma Adjustments				Pro Forma LGL
REVENUES	$	7,434		$	(7,064	)	$	—			$	370
Costs and expenses:
Manufacturing cost of sales		4,639			(4,412	)		—				227
Engineering, selling and administrative		2,671			(2,049	)		(232	)	(B)		390
OPERATING INCOME (LOSS)		124			(603	)		232				(247	)
Other income (expense):
Interest income, net		7			2			—				9
Investment loss		(2,373	)		—			—				(2,373	)
Other expense, net		(8	)		9			—				1
Total other expense, net		(2,374	)		11			—				(2,363	)
LOSS BEFORE INCOME TAXES		(2,250	)		(592	)		232				(2,610	)
Income tax (benefit) expense		(452	)		(106	)		46		(C)		(512	)
NET LOSS	$	(1,798	)	$	(486	)	$	186			$	(2,098	)
Basic per share information:
Weighted average number of shares used in basic earnings per share calculation		5,334,187			5,334,187			5,334,187				5,334,187
Basic net loss per share	$	(0.34	)	$	(0.09	)	$	0.03			$	(0.39	)
Diluted per share information:
Weighted average number of shares used in diluted earnings per share calculation		5,334,187			5,334,187			5,334,187				5,334,187
Diluted net loss per share	$	(0.34	)	$	(0.09	)	$	0.03			$	(0.39	)