As filed with the Securities and Exchange Commission on December 28, 2004
October 25 , 2010
Registration No. 333- ================================================================================
169540
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC
Washington, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LYNCH CORPORATION
(Exact
THE LGL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization) | 38-1799862 (I.R.S. Employer Identification Number) |
2525 Shader Road
Orlando, Florida 32804
407-298-2000
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
R. LaDuane Clifton
Chief Accounting Officer
2525 Shader Road
Orlando, Florida 32804
407-298-2000
(Name, address, including zip code, and telephone number,
including area code, of Registrant as Specified in Its Charter)
Indiana 38-1799862
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
140 Greenwich Avenue, 4th Floor
Greenwich, Connecticut 06830
(203) 622-1150
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
---------------------------
John C. Ferrara
President and Chief Executive Officer
Lynch Corporation
140 Greenwich Avenue, 4th Floor
Greenwich, Connecticut 06830
(203) 622-1150
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service of Process)
-----------------------------
agent for service)
Copy to:
David J. Adler Esq.
Olshan Grundman Frome Rosenzweig & Wolosky LLP
Park Avenue Tower
65 East 55th55th Street
New York, New York 10022
(212) 451-2300
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212-451-2300
212-451-2222 (fax)
Approximate date of commencement of proposed sale to the public: From time
to timeAs soon as practicable after the effective date of this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
registration statement.
If any of the securities being registered on this formForm are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
ý
If this formForm is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.[ ]_________
¨ ____________________
If this formForm is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.[ ]__________
¨ ______________
If delivery ofthis Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall have become effective upon filing with the prospectus is expected to be madeCommission pursuant to Rule 434,
please462(e) under the Securities Act, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title¨
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of Each Class of Proposed Maximum Proposed Maximum
Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered (1) Share (2) Price Registration Fee
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Common Share, $0.01 136,643 shares $14.75 $2,015,484.20 $237.22
par value per share
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(1) In the event of a share split, share dividend or similar transaction
involving the common shares, the shares registered hereby will
automatically be increasedsecurities pursuant to Rule 416 of the Securities Act of
1933, as amended, to cover the additional common shares required to prevent
dilution.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c)413(b) under the Securities Act, check the following box. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and based upon the average“smaller reporting company” in Rule 12b-2 of the high and low prices of the Registrant's common shares on the
American Stock Exchange on December 21, 2004.
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Act.
| Large accelerated filer | ¨ | Accelerated filer box | ¨ |
| Non-accelerated filer | ¨ | Smaller reporting company | ý |
CALCULATION OF REGISTRATION FEE
Title of each class of securities to be registered(1) | Proposed maximum aggregate offering price | |
| common stock, warrants to purchase common stock, units | $ 19,000,000 (2) | $ 1,354.70 (3) (4) |
| (1) | Securities registered hereunder may be sold separately, together or as units with other securities registered hereunder. There is being registered hereunder such currently indeterminate number or amount of common stock, warrants, or any combination thereof, separately or as units, as may from time to time be issued at currently indeterminate prices and as may be issuable upon conversion, redemption, repurchase, exchange or exercise of any securities registered hereunder, including any applicable anti-dilution provisions. |
| (2) | The proposed maximum offering price for securities will be determined from time to time by the Registrant in connection with, and at the time of, the issuance by the Registrant of the securities registered hereunder and is not specified as to each class of security pursuant to General Instruction II.D of Form S-3 under the Securities Act of 1933, as amended (the “Securities Act”). In no event will the aggregate initial offering price of the common stock, warrants and units issued under this Registration statement exceed $ 19,000,000 . |
| (3) | Calculated pursuant to Rule 457(o) under the Securities Act. |
| (4) | Of which $962.55 was previously paid. |
THE REGISTRANT HEREBY AMENDSINFORMATION IN THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
ASPROSPECTUS IS NOT COMPLETE AND MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THECHANGED. WE MAY NOT SELL THESE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE ASFILED WITH THE SECURITIES AND EXCHANGE COMMISSION ACTING
PURSUANTIS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SAID SECTION 8(A)SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 25 ,
MAY DETERMINE.
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The information2010 PROSPECTUS
THE LGL GROUP, INC.
COMMON STOCK
WARRANTS
UNITS
We may from time to time sell any combination of common stock, warrants, or any combination thereof, separately or as units, described in this prospectus isin one or more offerings. The aggregate initial offering price of all securities sold under this prospectus will not completeexceed $ 19,000,000 .
This prospectus provides a general description of the securities we may offer. Each time we sell securities we will provide specific terms of the securities offered in a supplement to this prospectus. The prospectus supplement may also add, update or change information contained in this prospectus. You should read this prospectus and may be changed. The
selling shareholderthe applicable prospectus supplement carefully before you invest in any securities. This prospectus may not be used to consummate a sale of securities unless accompanied by the applicable prospectus supplement.
Our common stock is traded on NYSE Amex under the symbol “LGL.” The last reported sales price of our common stock on NYSE Amex on October 21 , 2010 was $32.99.
We will sell these securities untildirectly to our stockholders or to purchasers or through agents on our behalf or through underwriters or dealers as designated from time to time. Refer to the registration
statementsection entitled “Plan of Distribution” in this prospectus. If any agents or underwriters are involved in the sale of any of these securities, the applicable prospectus supplement will provide the names of the agents or underwriters and any applicable fees, commissions or discounts. The price to the public of such securities and the net proceeds we expect to receive from such sale will also be set forth in a prospectus supplement.
AN INVESTMENT IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 4 OF THIS PROSPECTUS AND IN THE APPLICABLE PROSPECTUS SUPPLEMENT.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is October ___, 2010.
TABLE OF CONTENTS
| PAGE NO. |
| PROSPECTUS SUMMARY | 3 |
| RISK FACTORS | 4 |
| FORWARD-LOOKING STATEMENTS | 11 |
| DESCRIPTION OF CAPITAL STOCK | 12 |
| DESCRIPTION OF WARRANTS | 12 |
| DECSRIPTION OF UNITS | 13 |
| USE OF PROCEEDS | 14 |
| ANTITAKEOVER EFFECTS OF DELAWARE LAW | 14 |
| MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS | 15 |
| PLAN OF DISTRIBUTION | 16 |
| LEGAL MATTERS | 18 |
| EXPERTS | 18 |
| INCORPORATION BY REFERENCE | 18 |
| WHERE YOU CAN FIND MORE INFORMATION | 18 |
As permitted under the rules of the Securities and Exchange Commission, or the SEC, this prospectus incorporates important business information about The LGL Group, Inc. that is contained in documents that we file with the SEC, but that are not included in or delivered with this prospectus. You may obtain copies of these documents, without charge, from the website maintained by the SEC at www.sec.gov, as well as other sources. See “Incorporation By Reference” and “Where You Can Find Additional Information” in this prospectus.
PROSPECTUS SUMMARY
The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the “Risk Factors” section, and the applicable prospectus supplement. As used throughout this prospectus and the prospectus supplement, the terms “LGL,” the “Company,” “we,” “us,” and “our” refer to The LGL Group, Inc. and its subsidiaries. The Company operates through its principal subsidiary, M-tron Industries, Inc., which includes the operations of M-tron Industries, Ltd. (“Mtron”), and Mtron’s subsidiaries, Piezo Technology, Inc. and Piezo Technology India Private Ltd (jointly, “PTI”). The combined operations of Mtron and PTI are referred to herein as “MtronPTI.”
About This Prospectus
This prospectus is part of a Registration Statement on Form S-3 that we filed with the Securities and Exchange Commission
is effective. This
prospectus is not anutilizing a “shelf” registration process. Under this shelf process, we may offer
up to
sell these$ 19,000,000 offering price of any combination of securities
and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Subject to Completion, dated December 28, 2004
PROSPECTUS
LYNCH CORPORATION
136,643 COMMON SHARES
The selling shareholder listeddescribed in this prospectus
and its pledgees, donees,
transferees and other successors-in-interest may offer and sell from time to
time up to 136,643 common shares. We will not receive anyin one or more offerings. This prospectus provides you with a general description of the
proceeds from
such sale.
Our common shares are listed onsecurities that we may offer. Each time we use this prospectus to offer securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering, including the specific amounts, process and terms of the offered securities. The
American Stock Exchangeprospectus supplement may also add, update or change the information contained in this prospectus. You should read ca refully both this prospectus and any prospectus supplement, together with additional information described below under the
symbol "LGL." The last reported sale price for our common shares on December 21,
2004 was $15.00 per share.
The selling shareholder may sell the common shares from time to time on any
stock exchange or automated interdealer quotation system on which the securities
are listed, in the over-the-counter market, in privately negotiated transactions
or otherwise, at fixed prices that may be changed, at market prices prevailing
at the time of sale, at prices related to prevailing market prices or at prices
otherwise negotiated.
Our principal executive offices are located at 140 Greenwich Avenue, 4th
Floor, Greenwich, Connecticut 06830. Our telephone number is (203) 622-1150.
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INVESTING IN OUR COMMON SHARES INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 2.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is _____________, 2005.
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY.............................................................1
RISK FACTORS...................................................................2
WHERE YOU CAN FIND MORE INFORMATION...........................................11
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.............................11
INCORPORATION BY REFERENCE....................................................12
USE OF PROCEEDS...............................................................13
SELLING SHAREHOLDER...........................................................13
PLAN OF DISTRIBUTION..........................................................14
LEGAL MATTERS.................................................................15
EXPERTS.......................................................................15
heading “Where You Can Find More Information.” You should rely only on the information
and representationsthat we have provided or incorporated by reference in this prospectus,
orany applicable prospectus supplement and any related
supplement.free writing prospectus that we may authorize to be provided to you. We have not authorized
anyone elseany dealer, salesman or other person to
provide you with different information. The
selling shareholder willgive any information or to make any representation other than those contained or incorporated by reference in this prospectus, any applicable prospectus supplement or any related free writing prospectus that we may authorize to be provided to you. You must not
makerely upon any information or representation not contained or incorporated by reference in this prospectus or the accompanying prospectus supplement. This prospectus and the accompanying supplement to this prospectus do not constitute an offer to sell
these sharesor the solicitation of an offer to buy any securities other than the registered securities to which they relate, nor do this prospectus and the accompanying supplement to this prospectus constitute an offer to sell or the solicitation of an offer to buy securities in any
state
where thejurisdiction to any person to whom it is unlawful to make such offer
is not permitted.or solicitation in such jurisdiction. You should not assume that the information
contained in this prospectus,
any applicable prospectus supplement or any
supplementrelated free writing prospectus is accurate
as ofon any date
other thansubsequent to the date
set forth on the front of
those documents.
ii
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS IMPORTANT FEATURES OF THIS OFFERING AND THE
INFORMATION INCLUDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. THIS
SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD CONSIDER BEFORE
INVESTING IN OUR COMMON SHARES. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY,
ESPECIALLY THE RISKS OF INVESTING IN OUR COMMON SHARES DISCUSSED UNDER "RISK
FACTORS."
Unless the context otherwise requires, all referencesdocument or that any information we have incorporated by reference is correct on any date subsequent to "Lynch," "we,"
"us," or "our" inthe date of the document incorporated by reference, even though this prospectus, refer collectively toany applicable prospectus supplement or any related free writing prospectus is delivered or securities sold on a later date.Our Company
The LGL Group, Inc., formerly Lynch Corporation, an
Indiana corporation, and its subsidiaries.
The selling shareholder listedincorporated in this prospectus and its pledgees, donees,
transferees and other successors-in-interest may offer and sell from time to
time up to 136,643 common shares purchased directly from us in a private
placement on October 15, 2004. We agreed to register with1928 under the Securities and
Exchange Commission the resalelaws of the common shares purchased byState of Indiana and reincorporated under the selling
shareholder.
THE COMPANY
We arelaws of the State of Delaware in 2007, is a diversified holding company with subsidiaries engaged in manufacturing. We have three wholly-owned subsidiaries, M-tron Industries, Inc.,
Lynch Systems,manufacturing custom-designed highly engineered electronic components. The LGL Group, Inc. and Piezo Technology, Inc. Our business development strategyits subsidiaries (collectively, the “Company”) maintains its executive offices at 2525 Shader Road, Orlando, Florida 32804. The Company’s telephone number is to expand our existing operations through internal growth and acquisitions.
We may also, from time to time, consider(407) 298-2000. The Company’s common stock is traded on NYSE Amex under the acquisition of other assets or
businesses that are not related to our present businesses.
M-TRON INDUSTRIES, INC./PIEZO TECHNOLOGY, INC.
M-tron designs,ticker symbol “LGL.”
MtronPTI manufactures and markets custom designed highly-engineered electronic components that are used primarily to control the frequency or timing of electronic
signals in communications equipment.electronic circuits. Its devices, which are commonly called frequency control devices, crystals or oscillators, support fixedare used extensively in infrastructure equipment for the telecommunications and mobile
wireless, copper wire, coaxial cable, wide area networks, local area networksnetwork equipment industries. Its devices are also used in electronic systems for military applications, avionics, earth orbiting satellites, medical devices, instrumentation, industrial devices and fiber opticglobal positioning systems. It sells its products to original equipment
manufacturers, contract manufacturers and to distributors.
On October 15, 2004, M-tron completed its acquisition of all the issued and
outstanding shares of Piezo. Piezo is a wholly-owned subsidiary of M-tron that
designs, manufactures and markets
MtronPTI’s frequency control devices crystal resonators,consist of packaged quartz crystals, crystal oscillators timing devices, filters,and electronic filters. Its products produce an electrical signal that has the following attributes:
| · | accuracy -- the frequency of the signal does not change significantly over a period of time; |
| · | stability -- the frequency of the signal does not vary significantly when the product is subjected to a range of operating environments; and |
| · | low electronic noise -- the signal does not add interfering signals that can degrade the performance of electronic systems. |
MtronPTI has more than 40 years of experience designing, manufacturing and marketing crystal filters, liquid crystal
filtersbased frequency control products. Its customers rely on the skills of MtronPTI’s engineering and related productsdesign team to help solve frequency control problems during all phases of their products’ life cycles, including product design, prototyping, manufacturing, and technologies. Unlesssubsequent product improvements.
RISK FACTORS
You should carefully consider the context otherwise
requires,risks described below before making a decision to invest in our securities. You should also consider the risks described in the applicable prospectus supplement, which include the risks applicable to an investment in the securities offered thereby. If any of these risks actually occurs, our business financial condition, results of operations, or prospects could be materially adversely affected. This could cause the trading price of our securities to decline and a loss of all referencesor part of your investment. The risks described below are not the only ones facing us. Additional risks not currently known to "M-tron"us or that we currently believe to be immaterial may also impair the Company’s business operations and our liquidity.
Risks Related to Our Business and Industry
We had net losses in this prospectus refer collectively2009 and 2008 and are uncertain as to M-tron and Piezo.
LYNCH SYSTEMS, INC.
Lynch Systems designs, develops, manufactures and marketsour ability to sustain profitability.
We had a
broad rangenet loss of
manufacturing equipment$2,522,000 for the
electronic displayyear ended December 31, 2009 and
consumer glass
industries. Lynch Systems also produces replacement parts for various typesa net loss of
packaging and glass container-making machines, which Lynch Systems does not
manufacture.
RISK FACTORS
AN INVESTMENT IN OUR COMMON SHARES INVOLVES A HIGH DEGREE OF RISK. THE FOLLOWING
RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN ADDITION TO THE OTHER INFORMATION
IN THIS PROSPECTUS, INCLUDING THE INFORMATION UNDER "SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS," BEFORE MAKING AN INVESTMENT IN OUR COMMON SHARES.
WE HAVE INCURRED OPERATING LOSSES FOR THE PAST THREE YEARS AND FACE
UNCERTAINTY IN OUR ABILITY TO ACHIEVE OPERATING PROFITS IN THE FUTURE.
We have incurred substantial operating losses$1,282,000 for the past three years.
Without giving effect to gains realized fromyear ended December 31, 2008. Although we had a net profit in the deconsolidation in 2001first and 2002second quarters of one of our holdings,the current year, we suffered operating losses of $832,000, $3.3
million and $46.7 million in 2003, 2002 and 2001, respectively. We are uncertain whether we will be ablegenerate sufficient revenues and sufficiently reduce expenses to achieve or sustain operating profitsprofitability for the remainder of the current year and thereafter. The current worldwide economic slowdown has negatively affected our sales and the business of our suppliers, which may materially adversely affect our profitability and revenue growth.
Our revenue and profitability depend significantly on general economic conditions and the demand for the electronic components in which our products are used. Economic weakness and constrained spending in the future.
IF WE ARE UNABLE TO SECURE NECESSARY FINANCING, WE MAY NOT BE ABLE TO FUND OUR
OPERATIONS OR STRATEGIC GROWTH.
Inelectronics industry may result in severe business downturns or interruptions for our customers. As a result, we may experience decreased revenue and extraordinary price pressure from our customers, negatively affecting our margins and profitability.
Our revenue and profitability also depend on the business of our suppliers. Economic weakness affecting our suppliers may make them unable or unwilling to continue supplying components and materials at reasonable prices or at all, requiring us to use additional resources to find alternative sources of components and materials. As a result, we may experience increased expenses, negatively affecting our margins and profitability.
We will need to renew or replace our existing credit facilities and may need to raise additional capital in order to achievefund our strategic business objectives,operations, which may be especially difficult in the current economic environment.
Our credit facilities include d a term loan with an October 1, 2010 maturity date. At maturity, we repaid the entire outstanding principal balance of such loan, together with accrued interest, totalling approximately $2,281,000. In the future, we will need to renew or replace another of the Company’s credit facilit ies as it expires or if it otherwise becomes unavailable, and we may be
requiredrequire additional financing in order to seek additional financing.fund our operations. We may be unable to renew our existing credit facilit y , find replacement facilities, or obtain newadditional financing on acceptable terms, or at all. all, which may result in delays in payments to vendors and in our ordinary activities to repair, replace or improve upon existing infrastructure, and may cause our customers to lose confidence in our ability to supply high-quality products in a timely manner.
The capital and credit markets remain tight as a result of adverse economic conditions. If such conditions persist and funds are not readily available, it is likely that our ability to access capital and credit markets will remain limited. In addition, if current global economic conditions persist for an extended period of time or worsen substantially, our business may suffer in a manner that could cause us to fail to satisfy the financial and other restrictive covenants to which we are subject under our existing credit facilities.
Under certain of our existing credit facilities, we are required to obtain the lenders'lenders’ consent for most additional debt financing, potentially making it more difficult for us to obtain such financing.
Our indebtedness may adversely affect our financial health.
Should we incur additional indebtedness in the future , borrowings under our existing revolving credit facility and such additional indebtedness could, among other things: increase our vulnerability to general economic and industry conditions, including recessions; require us to use cash flow from operations to service our indebtedness, thereby reducing our ability to fund working capital, capital expenditures, research and development efforts and other expenses; limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; place us at a competitive disadvantage compared to competitors that have less indebtedness; or limit our ability to borrow additional funds that may be needed to operate and expand our business.
Our credit facilit y contain s provisions that could materially restrict our business.
Our credit facilit y contain s a number of significant covenants that, among other things, limit our ability to: dispose of assets; incur certain additional debt ; or repay other debt ; create liens on assets ; make investments, loans or advances ; make acquisitions or engage in mergers or consolidations ; make capital expenditures ; and engage in certain transactions with our subsidiaries and affiliates . Under our credit facility, we are required to meet certain financial ratios.
The restrictions contained in our credit facilit y could limit our ability to plan for or react to market conditions or meet capital needs or could otherwise restrict our activities or business plans. These restrictions could adversely affect our ability to finance our operations, strategic acquisitions, investments or other capital needs or to engage in other business activities that could be in our interests.
Our ability to comply with these covenants may be affected by events beyond our control. If we breach any of these covenants or restrictions, it could result in an event of default under our credit facility, or documents governing any other covenants, including
specific financial ratios. For example, weexisting or future indebtedness. A default, if not cured or waived, may require further capital to
continue to developpermit acceleration of our technology and infrastructure and for working capital
purposes.indebtedness. In addition, future acquisitions would likely require additional
equity and/our lenders could terminate their commitments to make further extensions of credit under our credit facilities. If our indebtedness is accelerated, we cannot be certain that we will have sufficient funds to pay the accelerated indebtedness or debt financing. Our failurethat we will have the ability to secure additional financing could
haverefinance accelerated indebtedness on terms favorable to us or at all.
We are a material adverse effect onholding company, and therefore are dependent upon the operations of our continued development or growth.
AS A HOLDING COMPANY, WE DEPEND ON THE OPERATIONS OF OUR SUBSIDIARIES TO MEET
OUR OBLIGATIONS.
subsidiaries to meet our obligations.
We are a holding company that transacts all of our business through our operating subsidiaries. Our primary assets are the shares of our operating subsidiaries. Our ability to meet our operating requirements and to make other payments depends on the surplus and earnings of our subsidiaries and their ability to pay dividends or to advance or repay funds. Payments of dividends and advances and repayments of intercompanyinter-company debt by our subsidiaries are restricted by our credit agreements.
WE MAY MAKE ACQUISITIONS THAT ARE NOT SUCCESSFUL OR FAIL TO PROPERLY INTEGRATE
ACQUIRED BUSINESSES INTO OUR OPERATIONS.
We may make acquisitions that are not successful, fail to properly integrate acquired businesses into our operations, or dispose of portions of our operations.
To the extent that we are able to secure the necessary financing, we intend to explore opportunities to buy other businesses or technologies that could complement, enhance or expand our current business or product lines, or that might otherwise offer us growth opportunities. We may have difficulty finding such opportunities or, if we do identify such opportunities are identified, we may not be able to complete such transactions for reasons including a failure to secure necessary financing.
Any transactions that we are able to identify and complete may involve a number of risks, including:
2
o the diversion of our management's attention from our existing business to
integrate the operations and personnel of the acquired or combined business
or joint venture;
o possible adverse effects on our operating results during the integration
process;
o substantial acquisition related expenses, which would reduce our net income
in future years;
o | · | the diversion of our management’s attention from our existing business to integrate the operations and personnel of the acquired or combined business or joint venture; |
| · | possible adverse effects on our operating results during the integration process; |
| · | substantial acquisition related expenses, which would reduce our net income, if any, in future years; |
| · | the loss of key employees and customers as a result of changes in management; and |
| · | our possible inability to achieve the intended objectives of the transaction. |
Should we consummate such a result of changes in
management; and
o our possible inability to achieve the intended objectives of the
transaction.
In addition,transaction, we may not be able to successfully or profitably integrate, operate, maintain and manage our newly acquired operations or employees. We may not be able to maintain uniform standards, controls, procedurespolicies and policies,procedures, and this may lead to operational inefficiencies.
PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER INDIANA LAW MAY PREVENT OR DELAY A
CHANGE OF CONTROL OF US AND COULD ALSO LIMIT THE MARKET PRICE OF OUR COMMON
SHARES.
Provisions
In addition, emerging market conditions or evolving business dynamics may lead us to dispose of portions of our
certificate of incorporation and bylaws, as well as
provisions of Indiana corporate law, may discourage, delay or prevent a merger,
acquisition or other change in control of our company, even if such a change in
control would be beneficial to our shareholders. These provisions may also
prevent or frustrate attempts by our shareholders to replace or remove our
management. These provisions include those:
o prohibiting our shareholders from fixing the number of our directors;
o requiring advance notice for shareholder proposals and nominations; and
o prohibiting shareholders from acting by written consent, unless unanimous.
We are subject to certain provisions of the Indiana Business Corporation
Law, or IBCL, that limit business combination transactions with 10% shareholders
during the first five years of their ownership, absent approval of our board of
directors. The IBCL also contains control share acquisition provisions that
limit the ability of certain shareholders to vote their shares unless their
control share acquisition was approved in advance by shareholders. These
provisions and other similar provisions make it more difficult for shareholders
or potential acquirers to acquire us without negotiation and could limit the
price that investors are willing to pay in the future for our common shares.
COMPLIANCE WITH CHANGING REGULATION OF CORPORATE GOVERNANCE AND PUBLIC
DISCLOSURE WILL RESULT IN ADDITIONAL EXPENSES.
Keeping abreast of, and in compliance with, changing laws, regulations and
standards relating to corporate governance and public disclosure, including the
Sarbanes-Oxley Act of 2002, new SEC regulations and American Stock Exchange
rules, will require an increased amount of management attention and external
resources. We intend to invest all reasonably necessary resources to comply with
evolving standards, which will result in increased general and administrative
expenses and a diversion of management time and attention from
revenue-generating activities to compliance activities.
3
WE MAY BE EXPOSED TO LIABILITY AS A RESULT OF BEING NAMED AS A DEFENDANT IN A
LAWSUIT BROUGHT UNDER THE SO-CALLED "QUI TAM" PROVISIONS OF THE FEDERAL FALSE
CLAIMS ACT.
Lynch, Lynch Interactive Corporation and various other parties are
defendants in a lawsuit brought under the so-called "qui tam" provisions of the
federal False Claims Act in the United States District Court for the District of
Columbia. The main allegation in the case is that the defendants participated in
the creation of "sham" bidding entities that allegedly defrauded the U.S.
Treasury Department by improperly participating in Federal Communications
Commission spectrum auctions restricted to small businesses, and obtained
bidding credits in other spectrum auctions allocated to "small" and "very small"
businesses. The lawsuit seeks to recover an unspecified amount of damages, which
amount would be automatically tripled under the statute. Although Lynch
Interactive is contractually bound to indemnify us for any losses or damages we
may incur as a result of this lawsuit, Lynch Interactive may lack the capital
resources to do so. As a result, we could be held liable and forced to pay a
significant amount of damages without recourse.
WE DO NOT ANTICIPATE PAYING CASH DIVIDENDS ON OUR COMMON SHARES IN THE
FORESEEABLE FUTURE.
We anticipate that all of our earnings will be retained for the development
of our business and do not anticipate paying cash dividends on our common
shares in the foreseeable future.
THERE IS A LIMITED MARKET FOR OUR COMMON SHARES. OUR SHARE PRICE IS LIKELY TO BE
HIGHLY VOLATILE AND COULD DROP UNEXPECTEDLY.
There is a limited public market for our common shares, and we cannot
assure you that an active trading market will develop. As a result of low
trading volume in our common shares, the purchase or sale of a relatively small
number of shares could result in significant share price fluctuations. Our share
price may fluctuate significantly in response to a number of factors, including
the following, several of which are beyond our control:
o changes in financial estimates or investment recommendations by securities
analysts relating to our shares;
o loss of a major customer;
o announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments; and
o changes in key personnel.
In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We could be the target of similar litigation in the future.
Securities litigation, regardless of merit or ultimate outcome, would likely
cause us to incur substantial costs, divert management's attention and
resources, harm our reputation in the industry and the securities markets and
reduce our profitability.
SECURITIES ANALYSTS MAY NOT INITIATE COVERAGE OF OUR COMMON SHARES OR MAY ISSUE
NEGATIVE REPORTS, AND THIS MAY HAVE A NEGATIVE IMPACT ON THE MARKET PRICE OF OUR
COMMON SHARES.
We cannot assure you that securities analysts will initiate coverage and
publish research reports on us. If securities analysts do not, this lack of
research coverage may adversely affect the market price of our common shares.
Recently adopted rules mandated by the Sarbanes-Oxley Act of 2002, and a global
4
settlement reached among the Securities and Exchange Commission, other
regulatory agencies and a number of investment banks in April 2003 has led to a
number of fundamental changes in how analysts are reviewed and compensated. In
particular, many investment banking firms are now required to contract with
independent financial analysts for their stock research. It may be difficult for
companies with smaller market capitalizations, such as us, to attract
independent financial analysts who will cover our common shares,current operations, which could have the effect of reducing our current business or the product lines which we offer. Our future rate of growth is highly dependent on the development and growth of the market for communications and network equipment.
In 2009, the majority of our revenues was derived from our wholly-owned subsidiary, MtronPTI, and its sales to manufacturers of communications and network infrastructure equipment, including indirect sales through distributors and contract manufacturers. In 2010, MtronPTI expects a negative effect onsmaller but significant portion of its revenues to be derived from sales to these manufacturers. Communications and network service providers have experienced periods of capacity shortage and periods of excess capacity. In periods of excess capacity, communications systems and network operators cut purchases of capital equipment, including equipment that incorporates MtronPTI’s products. A slowdown in the manufacture and purchase of communications and network infrastructure equipment could substantially reduce M tronPTI’s net sales and operating results and adversely affect our financial condition. Moreover, if the market price.
IF WE ARE UNABLE TO INTRODUCE INNOVATIVE PRODUCTS, DEMAND FOR OUR PRODUCTS MAY
DECREASE.
for communications or network infrastructure equipment fails to grow as expected, MtronPTI may be unable to maintain or grow its revenue.
If we are unable to introduce innovative products, demand for our products may decrease.
Our future operating results are dependent onupon the ability of our abilitywholly-owned subsidiary, MtronPTI, to continually develop, introduce and market innovative products, to modify existing products, to respond to technological change and to customize some of ourits products to meet customer requirements. There are numerous risks inherent in this process, including the risks that weMtronPTI will be unable to anticipate the direction of technological change or that weit will be unable to develop and market new products and applications in a timely or cost-effective manner to satisfy customer demand.
WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY.
The successbusiness of our business depends,customers is cyclical. A decline in part, upondemand in the electronic component industry may result in order cancellations and deferrals and lower average selling prices for our ability to protect
trade secrets, designs, drawings, copyrights and patents, obtain or license
patents and operate without infringing on the intellectual property rights of
others. We rely on a combination of trade secrets, designs, drawings,
copyrights, patents, nondisclosure agreements and technical measures to protectproducts.
Through our
proprietary rights in our products and technology. The steps taken by us in
this regard may not be adequate to prevent misappropriation of our technology.
In addition, the laws of some foreign countries in whichwholly-owned subsidiary, MtronPTI, we
operate do not
protect our proprietary rights to the same extent as do the laws of the United
States. Although we continue to evaluate and implement protective measures, we
cannot assure you that these efforts will be successful. Our inability to
protect our intellectual property rights could diminish or eliminate the
competitive advantages that we derive from our technology, cause us to lose
sales or otherwise harm our business.
OUR OPERATING RESULTS AND FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY
AFFECTED BY ECONOMIC, POLITICAL, HEALTH, REGULATORY AND OTHER FACTORS EXISTING
IN FOREIGN COUNTRIES IN WHICH WE OPERATE.
As we have significant international operations, our operating results and
financial condition could be materially adversely affected by economic,
political, health, regulatory and other factors existing in foreign countries in
which we operate. Our international operations are subject to inherent risks,
which may materially adversely affect us, including:
o political and economic instability in countries in which our products are
manufactured and sold;
o expropriation or the imposition of government controls;
o sanctions or restrictions on trade imposed by the United States government;
o export license requirements;
o trade restrictions;
o currency controls or fluctuations in exchange rates;
o high levels of inflation or deflation;
o greater difficulty in collecting our accounts receivable and longer payment
cycles;
5
o changes in labor conditions and difficulties in staffing and managing our
international operations; and
o limitations on insurance coverage against geopolitical risks, natural
disasters and business operations.
In addition, these same factors may also place us at a competitive
disadvantage when compared to some of our foreign competitors. In response to
competitive pressures and customer requirements, we may further expand
internationally at lower cost locations. If we expand into these locations, we
will be required to incur additional capital expenditures.
OUR BUSINESSES ARE CYCLICAL. THE RECENT DECLINE IN DEMAND IN THE ELECTRONIC
COMPONENT AND GLASS COMPONENT INDUSTRIES MAY CONTINUE, RESULTING IN ADDITIONAL
ORDER CANCELLATIONS AND DEFERRALS AND LOWER AVERAGE SELLING PRICES FOR OUR
PRODUCTS.
Our subsidiaries sell to industries that are subject to cyclical economic changes. Our sales are principally sells to customers within the telecommunications, military and aerospace industries that produce products with an expected business life ranging from less than one year to more than 10 years depending on their application. The electronic component and glass component industriesindustry in general, and specifically Lynch, have for the past several yearsMtronPTI, has experienced a decline in product demand on a global basis, resulting in order cancellations and deferrals and lower average selling prices. This decline is primarily attributable to a
slowing of growth in the demand for components used by telecommunications
infrastructure manufacturers and newer technologies introduced in the glass
display industry. We cannot assure you that any expected or perceived
improvements in the economy and the electronic component and glass component
industry will occur. The slowdowntrend may continue and may become more pronounced. A
slowdown in demand, as well as recessionary trends in the global economy, make
it more difficult for us to predict our future sales, which also makes it more
difficult to manage our operations.
THE RESULTS OF OUR OPERATIONS ARE SUBJECT TO FLUCTUATIONS IN THE AVAILABILITY,
QUALITY AND COST OF THE RAW MATERIALS AND COMPONENTS NEEDED FOR OUR PRODUCTS.
Many of our products require the use of raw materials
Our market is highly competitive, and components that
are produced in only a limited number of regions around the world or are
available from only a limited number of suppliers. We may have difficulty
obtaining these raw materials or components, the quality of available raw
materials or components may deteriorate or there may be significant price
increases for these raw materials or components. For periods in which the prices
of these raw materials or components are rising, we may be unablelose business to pass on the
increased cost to our customers, which would result in decreased margins for the
products in which they are used. For periods in which the prices are declining,
we may be required to write down our inventory carrying cost of these raw
materials or components, as we record our inventory at the lower of cost or
market. Depending on the extent of the difference betweenlarger and better-financed competitors.
Our market
price and our
carrying cost, this write-down could have an adverse effect on our financial
results and results of operations.
From time to time, we have experienced short-term market shortages of raw
materials or components that have resulted in higher costs to us. Future market
shortages could affect our ability to meet our production requirements during
periods of growing demand for our products.
OUR MARKETS ARE HIGHLY COMPETITIVE, AND WE MAY LOSE BUSINESS TO LARGER AND
BETTER-FINANCED COMPETITORS.
6
Our markets areis highly competitive worldwide, with low transportation costs and few import barriers. WeThrough our wholly-owned subsidiary, MtronPTI, we compete principally on the basis of product quality and reliability, availability, customer service, technological innovation, timely delivery and price. All ofWithin the industriesindustry in which we compete, havecompetition has become increasingly concentrated and globalizedglobal in recent years. OurMtronPTI’s major competitors, some of which are larger, than us, and potential competitors have substantially greater financial resources and more extensive engineering, manufacturing, marketing and customer support capabilities thancapabilities. We are dependent on a single line of business.
We are currently dedicated to manufacturing and marketing custom designed highly engineered electronic components that are used primarily to control the frequency or timing of signals in electronic circuits, and we have.
OUR SUCCESS DEPENDS ON OUR ABILITY TO RETAIN OUR KEY MANAGEMENT AND TECHNICAL
PERSONNEL AND ATTRACTING, RETAINING, AND TRAINING NEW TECHNICAL PERSONNEL.
do not offer any other products. Virtually all of our 2009 and 2010 revenues came from sales of frequency control devices, which consist of packaged quartz crystals, oscillator modules and electronic filters. We expect that this product line will continue to account for substantially all of our revenues for the foreseeable future.
Given our reliance on this single line of business, any decline in demand for this product line or failure to achieve continued market acceptance of existing and new versions of this product line may harm our business and our financial condition. Additionally, unfavorable market conditions affecting this line of business would likely have a disproportionate impact on us in comparison with certain competitors, who have more diversified operations and multiple lines of business. Should this line of business fail to generate sufficient sales to support ongoing operations, there can be no assurance that we will be able to develop alternate business lines.
Our success depends on our ability to retain key management and technical personnel and attracting, retaining, and training new technical personnel.
Our future growth and success will depend in large part upon our ability to recruit highly skilled technical personnel, including engineers, and to retain our existing management and technical team and to recruit and retain
highly skilled technical personnel, including engineers.personnel. The labor markets in which we operate are highly competitive and mostsome of our operations are not located in highly populated areas. As a result, we may not be able to retainrecruit and recruitretain key personnel. Our failure to hire, retain or adequately train key
personnelhighly-skilledemployees required for the operation of our business could hinder our ability to successfully develop marketable products or could have a negative impact on our performance.
WE MAY NOT REALIZE THE SYNERGIES OR ACHIEVE THE INTENDED OBJECTIVES SOUGHT FROM
M-TRON'S ACQUISITION OF PIEZO.
On October 15, 2004, M-tron completed its acquisition of Piezo. The value
of this acquisition is largely based on the synergies that we believe will be
created by the integration of these two companies. This process involves a
number of risks, including the diversion of our management's attention from our
existing business to integrate Piezo's operations and personnel, and possible
adverse effects on our operating results during the integration process.
In addition, we may be unabledepend on our senior executive officers and other key personnel to integrate, operate, maintain and manage Piezo's
operationsrun our business. We do not have long-term contracts with our key personnel. The loss of any of these officers or employees. We alsoother key personnel could adversely affect our operations.
Our backlog may not be able to maintain uniform standards,
controls, procedures and policies, and this may lead to operational
inefficiencies.
M-TRON'S BACKLOG MAY NOT BE INDICATIVE OF FUTURE SALES AND MAY ADVERSELY AFFECT
OUR BUSINESS.
M-tron'sindicative of future revenues.
The backlog of our wholly-owned subsidiary, MtronPTI, comprises orders that are subject to specific production release, orders under written contracts, oral and written orders from customers with which M-tron haswe have had long-standing relationships and written purchase orders from sales representatives. M-tron'sOur customers may order components from multiple sources to ensure timely delivery when backlog is particularly long and may cancel or defer orders without significant penalty. They oftenmay cancel orders when business is weak and inventories are excessive, a phenomenon that M-tron
haswe previously experienced in the most recent preceding economic slowdown. As a result, we do not believe
that M-tron'scannot provide assurances as to the portion of backlogged orders to be filled in a given year, and our backlog as of any particular date is necessarily representativemay not be representa tive of actual net salesrevenues for any succeeding period.
M-TRON RELIES UPON ONE CONTRACT MANUFACTURER FOR A SIGNIFICANT PORTION OF ITS
FINISHED PRODUCTS, AND A DISRUPTION IN ITS RELATIONSHIP COULD HAVE A NEGATIVE
IMPACT ON M-TRON'S SALES.
We rely upon a limited number of contract manufacturers for a significant portion of its finished products, and a disruption in those relationships could have a negative impact on our revenues.
In
2003,2009, approximately
30%10.9% of
M-tron's net sales wereour revenue was attributable to finished products that were manufactured by an independent contract manufacturer located in both Korea and
China.China (12.7% in 2008). We expect this manufacturer to account for a smaller but substantial portion of
M'tron's net salesour production in
20042010 and a material
7
portion of M-tron's salesour revenues for the next several years. M-tron doesWe do not have a written, long-term supply contract with this manufacturer. If this manufacturer becomes unable to provide products in the quantities needed, or at acceptable prices, M-tronwe would have to identify and qualify acceptable replacement manufacturers or manufacture the products internally. Due to specific product knowledge and process capability, M-tronwe could encounter difficulties in locating, qualifying and entering into arrangements with replacement manufacturers. As a result, a reduction in the production capability or financial viability of this manufacturer, or a termination of, or significant interruption in, M-tron'sour relationship with this manufacturer, may adversely affect M-tron'sour results of operations and our financial condition.
CONTINUED MARKET ACCEPTANCE OF M-TRON'S PACKAGED QUARTZ CRYSTALS, OSCILLATOR
MODULES AND ELECTRONIC FILTERS IS CRITICAL TO OUR SUCCESS, BECAUSE FREQUENCY
CONTROL DEVICES ACCOUNT FOR NEARLY ALL OF M-TRON'S SALES.
VirtuallyWe purchase certain key components from single or limited sources and could lose sales if these sources fail to fulfill our needs.
If single source components were to become unavailable on satisfactory terms, and our wholly-owned subsidiary, MtronPTI, could not obtain comparable replacement components from other sources in a timely manner, our business, results of operations and financial condition could be harmed. On occasion, one or more of the components used in our products have become unavailable, resulting in unanticipated redesign and related delays in shipments. We cannot give assurance that similar delays will not occur in the future. Our suppliers may be impacted by compliance with environmental regulations including Restriction of Hazardous Substances and Waste Electrical and Electronic Equipment, which could disrupt the supply of components or cause additional costs for MtronPTI to implement new components into its manufac turing process.
As a supplier to U.S. Government defense contractors, we are subject to a number of procurement regulations and other requirements and could be adversely affected by changes in regulations or any negative findings from a U.S. audit or investigation.
A number of the customers of our wholly-owned subsidiary, MtronPTI, are U.S. Government contractors. As one of their suppliers, we must comply with significant procurement regulations and other requirements. We also maintain registration under the International Traffic in Arms Regulations for all of M-tron's 2003our production facilities. One of those production facilities must comply with additional requirements and 2004 net sales cameregulations for its production processes and for selected personnel related to maintaining the security of classified information. These requirements, although customary within these markets, increase our performance and compliance costs. If any of these various requirements change, our costs of complying with them could increase and reduce our operating margins.
We operate in a highly regulated environment and are routinely audited and review ed by the U.S. Government and its agencies such as the Defense Contract Audit Agency (DCAA) and Defense Contract Management Agency (DCMA). These agencies review our performance under our contracts, our cost structure and our compliance with applicable laws, regulations, and standards, as well as the adequacy of, and our compliance with, our internal control systems and policies. Systems that are subject to review include our purchasing systems, billing systems, property management and control systems, cost estimating systems, compensation systems and management information systems. Any costs found to be improperly allocated to a specific contract will not be reimbursed or must be refunded if already reimbursed. If an audit uncovers improper or illegal a ctivities, we may be subject to civil and criminal penalties and administrative sanctions, which may include termination of contracts, forfeiture of profits, suspension of payments, fines and suspension, or prohibition from salesdoing business as a supplier to contractors who sell products and services to the U.S. Government. In addition, our reputation could be adversely affected if allegations of frequency control devices,impropriety were made against us.
We, from time to time, may also be subject to U.S. Government investigations relating to our operations and are expected to perform in compliance with a vast array of federal laws, including the Truth in Negotiations Act, the False Claims Act, the International Traffic in Arms Regulations promulgated under the Arms Export Control Act, and the Foreign Corrupt Practices Act. We may be subject to reductions of the value of contracts, contract modifications or termination, and the assessment of penalties and fines, which consistcould negatively impact our results of packaged quartz crystals, oscillator
modulesoperations and electronic filters. We expect that this product line will continuefinancial condition, if we are found to accounthave violated the law or are indicted or convicted for substantially allviolations of M-tron's net salesfederal laws related to government security regulations, employment practices or protection of the environment, or are found not to have acted responsibly as d efined by the law. Such convictions could also result in suspension or debarment from serving as a supplier to government contractors for the foreseeable
future. Any decline in demand for this product linesome period of time. Such convictions or failureactions could have a material adverse effect on us and our operating results.
Our products are complex and may contain errors or design flaws, which could be costly to achieve
continued market acceptance of existing andcorrect.
When our wholly-owned subsidiary, MtronPTI, releases new products, or new versions of this product lineexisting products, they may harm M-tron's business and our financial condition.
M-TRON'S FUTURE RATE OF GROWTH IS HIGHLY DEPENDENT ON THE DEVELOPMENT AND GROWTH
OF THE MARKET FOR COMMUNICATIONS AND NETWORK EQUIPMENT.
M-tron's business depends heavily upon capital expenditures by the
providers of communications and network services. In 2003, thecontain undetected or unresolved errors or defects. The vast majority of M-tron's netMtronPTI’s products are custom-designed for requirements of specific OEM systems. The expected business life of these products ranges from less than one year to more than 10 years depending on the application. Some of the customizations are modest changes to existing product designs while others are major product redesigns or new product platforms.
Despite testing, errors or defects may be found in new products or upgrades after the commencement of commercial shipments. Undetected errors and design flaws have occurred in the past and could occur in the future. These errors could result in delays, loss of market acceptance and sales, werediversion of development resources, damage to manufacturers of communicationsour reputation, legal action by its customers, failure to attract new customers and network
infrastructure equipment, including indirect sales through distributors and
contract manufacturers. In 2004, M-tron expects a smaller but significant
portion of its net sales to be to manufacturers of communications and network
infrastructure equipment. M-tron intends to increase its sales to communicationsincreased service costs.
Communications and network infrastructure equipment manufacturers in the future. Communications
and network service providers have experienced periods of capacity shortage and
periods of excess capacity. In periods of excess capacity, communications
systems and network operators cut purchases of capital equipment, including
equipment that incorporates M-tron's products. A slowdown in the manufacture and
purchase of communications and network infrastructure equipment could
substantially reduce M-tron's net sales and operating results and adversely
affectincreasingly rely upon contract manufacturers, thereby diminishing our financial condition. Moreover, if the market for communications or
network infrastructure equipment failsability to grow as expected, M-tron may be unable
to sustain its growth. In addition, M-tron's growth depends upon the acceptance
ofsell its products by communications and network infrastructuredirectly to those equipment manufacturers. If, for any reason, these manufacturers do not find M-tron's
products to be appropriate for their use, our future growth will be adversely
affected.
COMMUNICATIONS AND NETWORK INFRASTRUCTURE EQUIPMENT MANUFACTURERS INCREASINGLY
RELY UPON CONTRACT MANUFACTURERS, THEREBY DIMINISHING M-TRON'S ABILITY TO SELL
ITS PRODUCTS DIRECTLY TO THOSE EQUIPMENT MANUFACTURERS.
There is a
growingcontinuing trend among communications and network infrastructure equipment manufacturers to outsource the manufacturing of their equipment or components. As a result,
M-tron'sour ability to persuade these
original equipment
manufacturersOEMs to
specify ourutilize its products
has beenin customer designs could be reduced and, in the absence of a
8
manufacturer'smanufacturer’s specification of M-tron's products from our wholly-owned subsidiary, MtronPTI, the prices that M-tron can chargebe charged for them may be subject to greater competition.
M-TRON'S GOVERNMENT CONTRACTS CONTAIN PROVISIONS THAT ARE UNFAVORABLE TO IT AND
HAVE A NUMBER OF SPECIFIC RISKS THAT MAY RESULT IN LOST ORDERS AND PROFITS.
ManyOur customers are significantly larger than us and may exert leverage that will not be in our best interest.
The majority of M-tron's contracts with government agencies containthe sales made by our wholly-owned subsidiary, MtronPTI, are to companies that are many times its size. This size differential may place MtronPTI at a disadvantage in negotiating contractual terms. These terms include price, payment terms, product warranties and product consignment obligations.
There is a growing trend among some of MtronPTI’s larger customers that MtronPTI provide increased levels of warranty coverage. Some of these changes would require MtronPTI to pay substantial financial penalties if the customer invokes the warranty provision. These additional warranties may result in additional production costs to MtronPTI. In addition, these new warranty provisions may place MtronPTI at a disadvantage in comparison to its competitors and may result in terms that giveare not in the governments rightsbest interest of MtronPTI.
Future changes in or the determination of environmental liability and remedies not typically found in private
commercial contracts, including provisions enabling the government to:
o terminate or cancel existing contracts without good reason or penalty;
o suspend M-tron from doing business with a foreign government or prevent
M-tron from selling its products in certain countries;
o auditcompliance obligations of our past and object to M-tron's contract-relatedpresent operating subsidiaries may increase costs and expenses,decrease profitability.
Our past and current operating subsidiaries, including allocated indirect costs;Lynch Systems and o change specific terms and conditions in M-tron's contracts, including
changes that would reduce the value of the contract to M-tron.
M-tron's business generated from government contracts could be materially
and adversely affected if:
o M-tron's reputation or relationship with government agencies were impaired;
o M-tron were suspended or otherwise prohibited from contracting with a
domestic or foreign government;
o any of M-tron's products were to fail to meet the requirements of certain
applicable specified military standards;
o levels of government spending were to decrease;
o M-tron were barred from entering into new government contracts or extending
existing government contracts based on violations or suspected violations
of laws or regulations; or
o M-tron were not granted security clearances required to provide its
services and solutions to governments, or such security clearances were
revoked.
FUTURE CHANGES IN M-TRON'S ENVIRONMENTAL LIABILITY AND COMPLIANCE OBLIGATIONS
MAY INCREASE COSTS AND DECREASE PROFITABILITY.
M-tron'sMtronPTI’s manufacturing operations, products, and/or product packaging have been and are subject to environmental laws and regulations governing air emissions, wastewater discharges, and the handling, disposal and remediation of hazardous substances, wastes and other chemicals. In addition, more stringent environmental regulations may be enacted in the future, and we cannot presently determine the modifications, if any, in M-tron'sMtronPTI’s operations that any future regulations might require, or the cost of compliance that would be associated with these regulations.
LYNCH SYSTEMS' REVENUE IS LARGELY DEPENDENT ON DEMAND FOR ITS TELEVISIONS AND
COMPUTER MONITORS BASED ON CATHODE-RAY TUBE TECHNOLOGY. THIS TECHNOLOGY WILL
EVENTUALLY BE REPLACED BY PLASMA AND LIQUID CRYSTAL DISPLAYS.
Lynch Systems generates
Environmental laws and regulations may cause us to change our manufacturing processes, redesign some of our products, and change components to eliminate some substances in MtronPTI’s products in order to be able to continue to offer them for sale.
We have significant international operations and sales to customers outside of the United States that subjects us to certain business, economic and political risks.
We have office and manufacturing space in Noida, India. Additionally, our 2009 and 2008 export sales (primarily to Malaysia and China) accounted for 50.4% of our 2009 consolidated revenues and 56.5% of our 2008 consolidated revenues. We anticipate that sales to customers located outside of the United States will continue to be a significant portionpart of its revenue fromour revenues for the foreseeable future. Our international operations and sales to glass producerscustomers outside of the United States subject our operating results and financial condition to certain business, economic, political, health, regulatory and other risks, including:
| · | political and economic instability in countries in which the products of our wholly-owned subsidiary, MtronPTI, are manufactured and sold; |
| · | expropriation or the imposition of government controls; |
| · | sanctions or restrictions on trade imposed by the United States government; |
| · | export license requirements; |
| · | currency controls or fluctuations in exchange rates; |
| · | high levels of inflation or deflation; |
| · | greater difficulty in collecting accounts receivable and longer payment cycles; |
| · | changes in labor conditions and difficulties in staffing and managing international operations; and |
| · | limitations on insurance coverage against geopolitical risks, natural disasters and business operations. |
Additionally, to date, very few of our international revenue and cost obligations have been denominated in foreign currencies. As a result, changes in the value of the United States dollar relative to foreign currencies may affect our competitiveness in foreign markets. We do not currently engage in foreign currency hedging activities, but may do so in the future to the extent that supply televisionsuch obligations become more significant.
We use estimates and computer monitor displays thatassumptions in accounting for our annual performance-based cash incentive bonus plan, which if actual results vary significantly from those estimates and assumptions, could affect operating results in future periods.
Determining the appropriate amount to acc o u n t for our annual performance-based cash incentive bonus plan is based on our use of estimates and assumptions, which involves significant judgment. If actual results vary significantly from those estimates and assumptions, amounts accrued in reporting periods throughout the year may not be sufficient, or future periods could be adversely affected by the amounts required to adequately recognize the related expense, which could have a significant effect on the operating results in those reporting periods.
Unanticipated changes in our tax provisions or exposure to additional income tax liabilities could affect our profitability.
We are subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain. Furthermore, changes in domestic or foreign income tax laws and regulations, or their interpretation, could result in higher or lower income tax rates assessed or changes in the taxability of certain sales or the deductibility of certain expenses, thereby affecting our income tax expense and profitability. The final determination of any tax audits or related litigation could be materially different from our historical income tax provisions and accruals. Additionally, changes in the effective tax rate as a result of a change in the mix of earnings in countries with differing statutory tax rates, changes in our overall profitability, changes in tax legislation, changes in the valuation of deferred tax assets and liabilities, the results of audits and the examination of previously filed tax returns by taxing authorities and continuing assessments of our tax exposures could impact our tax liabilities and affect our income tax expense and profitability.
Ineffective internal controls over financial reporting may harm our business in the future.
We are subject to certain of the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002 ( “ the Act”). Our controls necessary for continued compliance with the Act may not operate effectively at all times and may result in a material weakness. The identification of material weaknesses in internal control over financial reporting, if any, could indicate a lack of proper controls to generate accurate financial statements. Further, our internal control effectiveness may be impacted if we are unable to retain sufficient skilled finance and accounting personnel, especially in light of the increased demand for such personnel among publicly traded companies.
FORWARD-LOOKING STATEMENTS
Information included or incorporated by reference in this prospectus may contain forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or the negative of these words or other variations on these words or comparable terminology, as they relate to future periods.
Examples of forward-looking statements include, but are not limited to, statements we make regarding the Company’s efforts to grow revenue, the Company’s expectations regarding fulfillment of backlog, the results of introduction of a new product line, future benefits to operating margins and the adequacy of the Company’s cash resources.
Forward-looking statements are based on cathode-ray tube technology. our current expectations and assumptions regarding our business, the economy and other future conditions. As forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees of assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include national and g lobal economic, business, competitive, market and regulatory conditions and the factors described under “Risk Factors” in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.
Further, we do not undertake any obligation to publicly update any forward-looking statements. As a result, you should not place undue reliance on these forward-looking statements.
DESCRIPTION OF CAPITAL STOCK
General
This marketprospectus describes the general terms of our common stock and other securities we may issue. For a more detailed description of these securities, you should read the applicable provisions of Delaware law and our Certificate of Incorporation and By-laws. When we offer to sell a particular class or series of these securities, we will describe the specific terms of the class or series in a supplement to this prospectus. Accordingly, for a description of the terms of any series of securities, you must refer to both the prospectus supplement relating to that series and the description of the securities contained in this prospectus. To the extent the information contained in the prospectus supplement differs from this summary description, you should rely on the information in the prospectus supplement.
Under our Certificate of Incorporation, the total number of shares of all classes of stock that we have authority to issue is 10,000,000, consisting entirely of shares of our common stock. As of September 30, 2010, there were 2,250,373 shares of common stock outstanding.
The description of our capital stock is qualified by reference to our Certificate of Incorporation and our By-laws, which are incorporated by reference as exhibits into the Registration Statement of which this prospectus is part.
Common Stock
Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to dividends, the holders of common stock are entitled to receive such dividends, if any, as may from time to time be declared by our Board of Directors out of funds legally available therefor. Under our Certificate of Incorporation, holders of common stock are entitled to one vote per share, and are entitled to vote upon such matters and in such manner as may be provided by law. Holders of common stock have no preemptive, conversion, redemption or sinking fund rights. Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to liquidation, holders of common stock, upon the liquidation, dissolution or winding up of the company, are entitled to share equally and ratably in the as sets of our company. The outstanding shares of common stock are, and the shares of common stock to be offered hereby when issued will be, fully paid and nonassessable. The rights, preferences and privileges of holders of common stock are subject to any series of preferred stock that we may authorize and issue in the future.
Transfer Agent and Registrar
Mellon Investors Services LLC has been appointed as the transfer agent and registrar for our common stock.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of common stock. We may issue warrants independently or together with any other securities offered by any prospectus supplement and may be attached to or separate from the other offered securities. Each series of warrants will be issued under a separate warrant agreement to be entered into by us with a warrant agent. The warrant agent will act solely as our agent in connection with the series of warrants and will not assume any obligation or relationship of agency or trust for or with any holders or beneficial owners of the warrants.
Further terms of the warrants and the applicable warrant agreements will be set forth in the applicable prospectus supplement.
The applicable prospectus supplement will describe the terms of the warrants in respect of which this prospectus is being rapidly penetrateddelivered, including, where applicable, the following:
| · | the title of the warrants; |
| · | the aggregate number of the warrants; |
| · | the price or prices at which the warrants will be issued; |
| · | the number of shares of common stock purchasable upon exercise of the warrants; |
| · | the designation and terms of the offered securities, if any, with which the warrants are issued and the number of the warrants issued with each offered security; |
| · | the date, if any, on and after which the warrants and the related common stock will be separately transferable; |
| · | the price at which each share of common stock purchasable upon exercise of the warrants may be purchased; |
| · | the date on which the right to exercise the warrants will commence and the date on which that right will expire; |
| · | the minimum or maximum amount of the warrants that may be exercised at any one time; |
| · | a discussion of certain Federal income tax considerations; and |
| · | any other terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants. |
DESCRIPTION OF UNITS
We may issue units comprising common stock and warrants in any combination, from time to time. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date.
The applicable prospectus supplement will describe:
• the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;
• any unit agreement under which the units will be issued; and
• any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units.
USE OF PROCEEDS
The net proceeds of this offering will be used for working capital and other general corporate purposes. Such purposes may include research and development expenditures and capital expenditures. As of the date of this prospectus, we cannot specify with certainty all of the particular uses of the proceeds from this offering. We will set forth in the applicable prospectus supplement our intended use for the net proceeds received from the sale of the related securities. Accordingly, we will retain broad discretion over the use of such proceeds. Pending use of the net proceeds, we intend to invest the net proceeds in interest-bearing, investment-grade securities.
ANTITAKEOVER EFFECTS OF DELAWARE LAW
Section 203 of the Delaware General Corporation Law, or the DGCL, provides that, subject to certain exceptions specified therein, an “interested stockholder” of a Delaware corporation may not engage in any business combination with the corporation for a three-year period following the time that such stockholder becomes an “interested stockholder” unless (1) prior to such time, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an “interested stockholder”, (2) upon consummation of the transaction which resulted in the stockholder becoming an “interested stockholder,” the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding certain shares), or (3) at or subsequent to such time, the business combination is approved by
9
thinner, lighter weight plasma displaysthe board of directors of the corporation and liquid crystal displays. Although
cathode-ray tube televisionsauthorized at an annual or special meeting of stockholders by the affirmative vote of at least 66⅔% of the outstanding voting stock which is not owned by the “interested stockholder.” Except as otherwise specified in Section 203, an “interested stockholder” is defined to include (1) any person that is the owner of 15% or more of the outstanding voting stock of the corporation, or is an affiliate or associate of the corporation and computer monitorswas the owner of 15% or more of the outstanding voting stock of the corporation at any time within three years immediately prior to the relevant date and (2) the affiliates and associates of any such person. Under certain circumstances, Section 203 makes it more difficult for a person who would be an “interested stockholder” to effect various business combinations with a corporation for a th ree-year period, although the stockholders may elect to exclude a corporation from the restrictions imposed thereunder. Our certificate of incorporation does not exclude us from the restrictions imposed under Section 203. The provisions of Section 203 may encourage companies interested in acquiring us to negotiate in advance with our board, because the stockholder approval requirement would be avoided if a majority of the directors then in office approve either the business combination or the transaction which results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in our management. It is possible that such provisions could make it more difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market for Common Equity
Our common stock is traded on NYSE Amex, formerly known as the American Stock Exchange, under the symbol “LGL.” Based upon information furnished by our transfer agent, at September 30, 2010, we had approximately 660 holders of record of our common stock. The following table sets forth the high and low sales prices for our common stock for the periods indicated as reported by NYSE Amex:
| Fiscal Year 2010 | | High | | | Low | |
| First Quarter | | $ | 6.90 | | | $ | 3.29 | |
| Second Quarter | | | 14.20 | | | | 5.55 | |
| Third Quarter | | | 23.79 | | | | 10.19 | |
| Fourth Quarter (through October 22, 2010) | | | 34.71 | | | | 22.12 | |
| | | | | | | | | |
| Fiscal Year 2009 | | High | | | Low | |
| First Quarter | | $ | 2.28 | | | $ | 1.18 | |
| Second Quarter | | | 4.50 | | | | 1.70 | |
| Third Quarter | | | 3.97 | | | | 2.59 | |
| Fourth Quarter | | | 3.75 | | | | 2.30 | |
| | | | | | | | | |
| Fiscal Year 2008 | | High | | | Low | |
| First Quarter | | $ | 13.90 | | | $ | 6.20 | |
| Second Quarter | | | 8.75 | | | | 6.50 | |
| Third Quarter | | | 8.40 | | | | 5.00 | |
| Fourth Quarter | | | 5.10 | | | | 1.00 | |
Dividend Policy
The Board of Directors has adopted a policy of not paying cash dividends. This policy takes into account the long-term growth objectives of the Company, especially its acquisition program, stockholders’ desire for capital appreciation of their holdings and the current tax law disincentives for corporate dividend distributions. In addition, the Company’s current credit agreements limit the subsidiaries’ ability to pay dividends and under such provisions, the Company currently retain advantagescannot pay any dividends. Accordingly, no cash dividends have been paid since January 30, 1989, and none are expected to be paid for the foreseeable future.
Equity Compensation Plan Information
The following table provides information as of December 31, 2009 about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans (including individual arrangements):
| | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | | Weighted-average exercise price of outstanding options, warrants and rights | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |
Equity compensation plans approved by security holders(1) | | | 20,000 | | | $ | 13.17 | | | | 481,700 | |
| Equity compensation plans not approved by security holders | | | -- | | | | -- | | | | -- | |
| Total | | | 20,000 | | | $ | 13.17 | | | | 481,700 | |
| (1) | Our 2001 Equity Incentive Plan was originally approved by our stockholders on May 2, 2002, and an amendment to the 2001 Equity Incentive Plan was approved by our stockholders on May 26, 2005. 600,000 shares of our common stock were authorized for issuance under the 2001 Equity Incentive Plan, as amended. |
PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus in image qualityany one or more of the following ways from time to time:
| · | directly to investors, including through a specific bidding, auction or other process; |
| · | to investors through agents; |
| · | to or through brokers or dealers; |
| · | to the public through underwriting syndicates led by one or more managing underwriters; |
| · | to one or more underwriters acting alone for resale to investors or to the public; or |
| · | through a combination of any such methods of sale. |
We may also sell the securities offered by this prospectus in “at the market offerings” within the meaning of Rule 415(a)(4) of the Securities Act, to or through a market maker or into an existing trading market, on an exchange or otherwise.
A prospectus supplement accompanying this prospectus will set forth the terms of the offering and the method of distribution and will identify any firms acting as underwriters, dealers or agents in connection with the offering, including:
| · | the name or names of any underwriters, dealers or agents; |
| · | the purchase price of the securities and the proceeds to us from the sale; |
| · | any over-allotment options under which the underwriters may purchase additional securities from us; |
| · | any underwriting discounts and other items constituting compensation to underwriters, dealers or agents; |
| · | any public offering price; |
| · | any discounts or concessions allowed or reallowed or paid to dealers; or |
| · | any securities exchange or market on which the securities offered in the prospectus supplement may be listed. |
Only those underwriters identified in such prospectus supplement would be deemed to be underwriters in connection with securities offered by the applicable prospectus supplement. Any underwritten offering may be on a best efforts or a firm commitment basis.
The distribution of the securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, at varying prices determined at the time of sale, or at prices determined as the applicable prospectus supplement specifies. The common stock may be sold through a rights offering.
In connection with the sale of the securities, underwriters, dealers or agents may be deemed to have received compensation from us in the form of underwriting discounts or commissions and also may receive commissions from purchasers for whom they may act as agent. Underwriters may sell the securities to or through dealers, and the dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters or commissions from the purchasers for whom they may act as agent.
The prospectus supplement accompanying this prospectus in respect of an offering will include information regarding any underwriting discounts or other compensation that we pay to underwriters or agents in connection with the offering, and any discounts, concessions or commissions which underwriters allow to dealers. Underwriters, dealers and agents participating in the distribution may be deemed to be underwriters, and any discounts and commissions they receive and any profit they realize on the resale of the securities may be deemed to be underwriting discounts and commissions under the Securities Act. Underwriters and their controlling persons, dealers and agents may be entitled, under agreements entered into with us, to indemnification against and contribution toward specific civil liabilities, including liabilities under the Securiti es Act.
Unless otherwise specified in the accompanying prospectus supplement, each series of securities will be a new issue with no established trading market, other than shares of our common stock, which are listed on NYSE Amex. Any common stock sold pursuant to a prospectus supplement will be listed on NYSE Amex, subject to official notice of issuance. No assurance can be given as to the liquidity of, or the trading market for, any offered securities.
In connection with an offering, the underwriters may purchase and sell the securities in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of securities than they are required to purchase in an offering. Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of the securities while an offering is in progress. The underwriters also may impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the underwriters have repurchased the securities sold by or for the account of that underwriter in stabilizing or short-covering transactions. These activities by the underwriters may stabilize, maintain or otherwise affect the market price of the securities.
As a result, the price of the securities may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by the underwriters at any time. Underwriters may engage in over-allotment. If any underwriters create a short position in the securities in an offering in which they sell more securities than are set forth on the cover page of the applicable prospectus supplement, the underwriters may reduce that short position by purchasing the securities in the open market.
Underwriters, dealers or agents that participate in the offer of the securities, or their affiliates or associates, may have engaged or engage in transactions with and perform services for us or our affiliates in the ordinary course of business for which they may have received or receive customary fees and reimbursement of expenses.
Any underwriters who are specialists on NYSE Amex may engage in passive market making transactions in the securities on NYSE Amex in accordance with Rule 103 of Regulation M, during the business day prior to the pricing of the offering, before the commencement of offers or sales of the securities. Passive market makers must comply with applicable volume and price glass producerslimitations and must be identified as passive market makers. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for such security; if all independent bids are investing billions of dollars to
improvelowered below the quality and lowerpassive market maker’s bid, however, the unitpassive market maker’s bid must then be lowered when certain purchase limits are exceeded. Passive market making may stabilize the market price of plasma, liquid crystalthe securities at a level above that which mig ht otherwise prevail in the open market and, other
display types. We believe that market penetration by plasma and liquid crystal
display producers will continue and eventually render obsolete cathode-ray tube
technology and this Lynch Systems product line.
LYNCH SYSTEMS' DEPENDENCE ON A FEW SIGNIFICANT CUSTOMERS EXPOSES IT TO OPERATING
RISKS.
Lynch Systems' sales to its 10 largest customers accounted for
approximately 84%if commenced, may be discontinued at any time.
In compliance with the guidelines of its net sales in 2003, 2002 and 2001 and 72% in 2004. Lynch
Systems' sales to its largest customer accounted for approximately 20% of its
net sales in 2003, 2002 and 2001. If a significant customer reduces, delaysthe Financial Industry Regulatory Authority, or cancels its orders for any reason,FINRA, the business and results of operations of
Lynch Systems would be negatively affected.
A MULTIPLE MACHINE ORDER AND FUTURE ORDERS WITH A SIGNIFICANT CUSTOMER IN THE
TABLEWARE MARKET ARE CONTINGENT UPON THE SUCCESSFUL INSTALLATION AND OPERATION
OF THE MACHINES.
Lynch Systems has a significant order for glass manufacturing machines that
are scheduledmaximum compensation to be shippedreceived by any FINRA member or independent broker dealer may not exceed 8% of the aggregate amount of the securities offered under this prospectus and installedany applicable prospectus supplement.
The underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the customer's factoriesordinary course of business.
LEGAL MATTERS
Certain legal matters with respect to the securities will be passed upon for us by Olshan Grundman Frome Rosenzweig & Wolosky LLP, New York, New York.
EXPERTS
The consolidated financial statements of our company as of December 31, 2009 and 2008 and for the years then ended , incorporated by reference in 2005.
We expect that this contract will represent approximately 33%prospectus, have been so incorporated in reliance upon the report of Lynch Systems'
revenuesJ.H. Cohn LLP, independent registered public accountants, given upon its authority as experts in 2005. Payment termsaccounting and conditionsauditing .
INCORPORATION BY REFERENCE
| · | The SEC allows us to incorporate by reference information contained in documents we file with it, which means that we can disclose important information to you by referring you to those documents already on file with the SEC that contain that information. The information incorporated by reference is considered to be part of this prospectus. The following documents, which have been filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are incorporated by reference: |
| · | our Annual Report on Form 10-K for the fiscal year ended December 31, 2009; |
| · | our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2010 and June 30, 2010; and |
| · | our Current Reports on Form 8-K, filed with the SEC on January 7, 2010, February 4, 2010, March 30, 2010, May 18, 2010, May 25, 2010, August 5, 2010, August 13, 2010, August 16, 2010, August 17, 2010, September 23, 2010, October 4, 2010 and October 13, 2010. |
In addition, we also incorporate by reference all documents we file under this contract are based on
the successful operation of these machines during a trial operating period. Many
of these machines utilize new processes and require customer training. The
abilitySection 13(a), 13(c), 14 or 15(d) of the customer's personnel and resources to operate these machines
successfully is critical to Lynch Systems' ability to realize full payment. IfExchange Act (a) after the customer cannot realize the full benefit of these machines, someinitial filing date of the paymentsregistration statement of which this prospectus is a part and before the effectiveness of the registration statement and (b) after the effectiveness of the registration statement and before the termination of the offering. The information contained in these future filings will automatically update and supersede the information contained in this prospectus or incorporated by reference to any previously filed document.
You may
be forfeited and future orders fromrequest copies of the documents incorporated by reference in this
customer may be canceled.
10
prospectus, at no cost, by writing or telephoning us at: The LGL Group, Inc.
2525 Shader Road
Orlando, Florida 32804
407-298-2000
Attention: Corporate Secretary
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Commission a registration statement on Form S-3 (including exhibits) under the Securities Act, with respect to the SEC for our
common shares offeredto be sold in this offering. This prospectus does not contain all the information set forth in the registration statement. You should referFor further information with respect to our company and the common stock offered in this prospectus, reference is made to the registration statement, and its exhibits for additional information. Whenever we
make references in this prospectus to any of our contracts, agreements or other
documents, the references are not necessarily complete and you should refer toincluding the exhibits attachedfiled thereto. With respect to each such document filed with the Commission as an exhibit to the registration statement, reference is made to the exhibit for the copiesa more complete description of the actual
contract, agreement ormatter involved.
We file periodic reports, proxy statements and other document.
The SEC maintains aninformation with the SEC. Our filings are available to the public over the Internet at the SEC’s web site at http://www.sec.gov that contains
reports, proxy and information statements, and other information regarding us.www.sec.gov. You may also read and copy any document we file with the SEC at itsthe SEC’s Public Reference Room, located at 450 Fifth100 F Street, N.W.N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of theits Public Reference Room.
Our common shares are listed on
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Other Expenses of Issuance and Distribution
We estimate that expenses in connection with the American Stock Exchange and our reports
anddistribution described in this registration statement (other than brokerage commissions, discounts or other information about us may also be inspected atexpenses relating to the officessale of the American Stock Exchange at 86 Trinity Place, New York, New York 10006.
Additional information about us is available overshares by the Internet at our web site
at www.lynchcorp.com.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and documents incorporated by reference into this
prospectus contain forward-looking statements withinselling security holders) will be as set forth below. We will pay all of these expenses. The amounts shown below, with the meaning of Section 27Aexception of the Securities Actand Exchange Commission registration fee, are estimates.
| SEC registration fee | | $ | 1,354.70 | |
| Accounting fees and expenses | | | 10,000.00 | |
| Legal fees and expenses | | | 40,000.00 | |
| Printing expenses | | | 5,000.00 | |
| Blue sky fees and expenses | | | 5,000.00 | |
| Transfer agent fees and expenses | | | 10,000.00 | |
| Miscellaneous | | | 3,645.30 | |
| | | | | |
| | | $ | 75,000.00 | |
Indemnification of 1933,Directors and Officers
Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers as amended,well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent of the corporation. Section 21E145 of the Delaware General Corporation Law also provides that expenses (including attorneys’ fees) incurred by a director or officer in defending an action may be paid by a corporation in advance of the final disposition of an action if the director or officer undertakes to repay the advanced amoun ts if it is determined such person is not entitled to be indemnified by the corporation. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. The Company’s Bylaws provide that, to the fullest extent permitted by law, the Company shall indemnify and hold harmless any person who was or is made or is threatened to be made a party or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that such person, or the person for whom he is the legally representative, is or was a director or officer of the Company, against all liabilities, losses, expenses (including attorney’s fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with su ch proceeding.
Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for any transaction from which the director derived an improper personal benefit. The Company’s Certificate of Incorporation provides for such limitation of liability.
The Company’s Bylaws provide for the indemnification of, and advancement of expenses to, directors and officers of the Company (and, at the discretion of the Board of Directors of the Company, employees and agents of the Company to the extent that Delaware law permits the Company to provide indemnification to such persons) in excess of the indemnification and advancement otherwise permitted under Section 145 of the DGCL, subject only to limits created by applicable Delaware law (statutory or non-statutory), with respect to actions for breach of duty to the Company, its stockholders and others. The provision does not affect directors’ responsibilities under any other laws, such as the federal securities laws or state or federal environmental laws.
The Company has entered into agreements with its directors and executive officers, that require the Company to indemnify such persons to the fullest extent permitted by law, against expenses, judgments, fines, settlements and other amounts incurred (including attorneys’ fees), and advance expenses if requested by such person, in connection with investigating, defending, being a witness in, participating, or preparing for any threatened, pending, or completed action, suit, or proceeding or any alternative dispute resolution mechanism, or any inquiry, hearing, or investigation (collectively, a “Proceeding”), relating to any event or occurrence that takes place either prior to or after the execution of the indemnification agreement, related to the fact that such person is or was a director or officer of the Company, or whil e a director or officer is or was serving at the request of the Company as a director, officer, employee, trustee, agent, or fiduciary of another foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust, or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation that was a predecessor corporation of the Company or of another enterprise at the request of such predecessor corporation, or related to anything done or not done by such person in any such capacity, whether or not the basis of the Proceeding is alleged action in an official capacity as a director, officer, employee, or agent or in any other capacity while serving as a director, officer, employee, or agent of the Company. Indemnification is prohibited on account of any Proceeding in which judgment is rendered against such persons for an accounting of profits made from the purchase or sale by such persons of securities of the Company pursuant to the provisions of Section 16 (b) of the Securities Exchange Act of 1934, as amended, that are not historical facts, but rather are
based on current expectations, estimates and projections about our business and
industry, our beliefs and assumptions. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates," and variationsor similar provisions of these
words and similar expressions are intended to identify forward-looking
statements. These statements are based on our current plans and expectations and
involve risks and uncertainties over which we have no control, that could cause
actual future activities and results of operations to be materially different
from those set forth in the forward-looking statements. Important factors that
could cause actual future activities and operating results to differ include
fluctuating demand for capital goods such as large glass presses, delay in the
recovery of demand for components used by telecommunications infrastructure
manufacturers and exposure to foreign economies. Important information regarding
risks and uncertainties isany federal, state, or local laws. The indemnification agreements also set forth elsewherecertain procedures that will apply in this document, including
in those described in "Risk Factors" beginningthe event of a claim for indemnification thereunder.
Insurance. The Company may purchase and maintain insurance on
page 2, as well as elsewhere
in this prospectus and in documents incorporated by reference into this
prospectus. You are cautioned not to place undue reliance on these
forward-looking statements, which reflect our management's view only as of the
date of this prospectus or as of the datebehalf of any
document incorporated by
reference into this prospectus. All subsequent writtenperson who is or
oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by these cautionary statements. We undertake no
obligation to update these statements or publicly release the results of any
revisions to the forward-looking statements that we may make to reflect events
or circumstances after the date of this prospectus or the date of any document
incorporated into this prospectus or to reflect the occurrence of unanticipated
events.
11
You are also urged to carefully review and consider the various disclosures
made by us in this document, as well as in our periodic reports on Forms 10-K,
10-Q and 8-K, filed with the Securities and Exchange Commission.
We make available, free of charge, our annual report on Form 10-K,
quarterly reports on Form 10-Q, and current reports on Form 8-K, if any.
We also make this information available on our website at
www.lynchcorp.com.
INCORPORATION BY REFERENCE
The following documents filed by us with the SEC are incorporated by
reference in this prospectus:
(1) Our Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 2004;
(2) Our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2004;
(3) Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2004;
(4) Our Annual Report on Form 10-K for the fiscal year ended December 31, 2003;
(5) Our Current Report on Form 8-K filed on November 18, 2004;
(6) Our Current Report on Form 8-K filed on October 20, 2004;
(7) Our Current Report on Form 8-K filed on October 8, 2004;
(8) Our Current Report on Form 8-K filed on September 23, 2004;
(9) Our Current Report on Form 8-K filed on September 14, 2004;
(10) Our Current Report on Form 8-K filed on September 8, 2004;
(11) Our Current Report on Form 8-K filed on December 22, 2004; and
(12) The description of the common shares contained in our Registration
Statement under the Securities Exchange Act of 1934 with respect to such
common shares filed with the Securities and Exchange Commission, including
any amendments or reports filed for the purpose of updating such
description.
All documents subsequently filed with the SEC by us pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended,
prior to the filing ofwas a post-effective amendment that indicates that all
securities offered herein have been sold or that deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be part hereof from the respective dates of filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof or of the related prospectus to the extent that a statement
contained herein or in any other subsequently filed document that is also
incorporated or deemed to be incorporated herein modifies or supersedes such
statement.
12
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this registration statement.
You may request a copy of these filings (excluding the exhibits to such
filings that we have not specifically incorporated by reference in such filings)
at no cost, by writing or telephoning us at the following address:
Lynch Corporation
140 Greenwich Avenue, 4th Floor
Greenwich, Connecticut 06830
Attention: Secretary
(203) 622-1150
USE OF PROCEEDS
The common shares offered hereby are being registered for the account of
the selling shareholder identified in this prospectus. All net proceeds from the
sale of the common shares will go to the selling shareholder. Accordingly, we
will not receive any part of the proceeds from such sales.
SELLING SHAREHOLDER
The following table sets forth information relating to the selling
shareholder and is as of the effective date of this prospectus. It includes the
number of common shares beneficially owned by the selling shareholder, the
maximum number of common shares to be sold in this offering by the selling
shareholder and the number of common shares to be beneficially owned by the
selling shareholder after this offering (assuming sale of such maximum number of
shares). The selling shareholder, Venator Merchant Fund, L.P., has not been andirector, officer director or employee of the Company, for the past three years. Venatoror is an investment limited partnership controlled by our Chairman of the Board,
Marc Gabelli. Mr. Gabelli became Chairman of the Board on September 20, 2004.
The common shares offered hereby were acquired on October 15, 2004. Mr. Gabelli
is the chief executive officer of the sole general partner of Venator and has
sole dispositive and voting power over these shares. Except as set forth in this
paragraph, Venator has not had any material relationship with us in the past
three years. As of December 23, 2004, we have 1,632,126 common shares issued and
outstanding.
For purposes of the table below, beneficial ownership is determined in
accordance with the rules of the SEC, and includes voting or investment power
with respect to shares. The inclusion of any shares in this table does not
constitute an admission of beneficial ownership for the selling shareholder
named below.
13
Shares Percent Maximum
Beneficially Beneficially Number of Shares to be Percent to be
Owned Prior Owned Prior Shares to be Beneficially Beneficially
Name and Address of to this to this Offered for Owned after Owned after
Selling Shareholder(1) Offering Offering Resale this Offering this Offering
- -----------------------------------------------------------------------------------------------------------------------
Venator Merchant Fund, L.P. 336,884 20.64% 136,643 200,241 12.27%
- -----------------------------------------------------------------------------------------------------------------------
(1) The address of the selling shareholder is One Corporate Center, Rye, New
York 10580.
Our registration of the shares included in this prospectus does not
necessarily mean that Venator will opt to sell any of the shares offered hereby.
The shares covered by this prospectus may be sold from time to time by the
selling shareholder so long as this prospectus remains in effect.
PLAN OF DISTRIBUTION
The selling shareholder, which as used herein includes donees, pledgees,
transferees or other successors-in-interest of the selling shareholder, selling
common shares or interests in common shares received after the date of this
prospectus from the selling shareholder as a gift, pledge, partnership
distribution or other transfer, may, from time to time, sell, transfer or
otherwise dispose of any or all of their common shares or interests in common
shares on any stock exchange, market or trading facility on which the shares are
traded or in private transactions. These dispositions may be at fixed prices, at
prevailing market priceswas serving at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale, or at
negotiated prices.
The selling shareholder may, from time to time, pledge or grant a security
interest in some or all of the common shares owned by it and, if it defaults in
the performance of its secured obligations, the pledgees or secured parties may
offer and sell the common shares, from time to time, under this prospectus, or
under an amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending the list of selling shareholders to
include the pledgee, transferee or other successors in interest as selling
shareholders under this prospectus. The selling shareholder also may transfer
the common shares in other circumstances, in which case the transferees,
pledgees or other successors in interest will be the selling beneficial owners
for purposes of this prospectus.
The selling shareholder and any underwriters, broker-dealers or agents that
participate in the sale of the common shares or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
The selling shareholder is an "underwriter" within the meaning of Section 2(11)
of the Securities Act and is subject to the prospectus delivery requirements of
the Securities Act.
14
LEGAL MATTERS
The validity of the common shares offered hereby has been passed upon by
Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park Avenue Tower, 65 East 55th
Street, New York, New York 10022.
EXPERTS
The financial statements and schedule audited by Ernst & Young LLP have
been incorporated by reference to our Annual Report on Form 10-K for the fiscal
year ended December 31, 2003 in reliance on their report given on their
authority as experts in auditing and accounting.
15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses that will be paid by us
in connection with the securities being registered. With the exception of the
Securities and Exchange Commission ("SEC") registration fee and the American
Stock Exchange ("AMEX") listing fee, all amounts shown are estimates.
SEC registration fee................................................. $237.22
AMEX listing fee..................................................... $2,732.86
Legal fees and expenses (including Blue Sky fees) ................... $27,000
Accounting Fees and Expenses......................................... $5,000
Miscellaneous ..................................................... $5,000
---------
Total ................................................. $39,970.08
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Except as hereinafter set forth, there is no statute, charter provision,
by-law, contract or other arrangement under which any controlling person,
director or officerrequest of the Company is insuredas a director, officer, employee or indemnifiedagent of another company, partnership, joint venture, trust or other enterprise against liability asserted against him and incurred by him in any mannersuch capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify him against liability which he may incur in his capacity as such.
Article VI, Section 6.2under the provisions of Registrant's Restated Articlesthis section. The Company currently maintains such insurance. Settlement by the Company. The right of Incorporation
provides thatany person to be indemnified is subject always to the extent not inconsistent with applicable law, every directorright of the Company by its Board of Directors, in lieu of such indemnity, to settle any such claim, action, suit or proceeding at the expense of the Company by the payment of the amount of such settlement and officer shall be indemnified by Registrant against all liabilitythe costs and reasonable expense that may beexpenses incurred by such director or officer in connection with or resulting from any claim, (i) if such director or officer is
wholly successful with respect to the claim, or (ii) if not wholly successful,
then if such director or officer is determined to have acted in good faith, in
what the director or officer reasonably believed to be the best interests of
Registrant or at least not opposed to its best interest and, in addition, with
respect to any criminal claim is determined to have had reasonable cause to
believe that his conduct was lawful or had no reasonable cause to believe that
his conduct was unlawful. The termination of any claim, by judgment, order,
settlement (whether with or without court approval), or conviction or upon a
plea of guilty or of nolo contendere, or its equivalent, shall not create a
presumption that a director or officer did not meet the standards of conduct set
forth in clause (ii) hereof. For a more detailed description, reference is made
to Article VI, Section 6.2 of the Registrant's Restated Articles of
Incorporation filed as Exhibit 3(a) hereto which contains certain
indemnification provisions pursuant to authority contained in the Indiana
Business Corporation Law.
Registrant's directors and officers are also covered under Registrant's
directors and officers insurance policy up to a maximum of $10 million.
therewith.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the
RegistrantCompany pursuant to the foregoing provisions,
or otherwise, the
RegistrantCompany has been
informedadvised that in the opinion of the
Securities and Exchange Commission, such
II-1
indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
The following sectionsIn the event that a claim for indemnification against such liabilities (other than the payment of
Chapter 37 of the Indiana Business Corporation
Law provide as follows:
Section 23-1-37-8 Permissive Indemnification
(a) A corporation may indemnify an individual made a party to a proceeding
because the individual isexpenses incurred or
waspaid by a director,
against liability incurredofficer or controlling person in
the
proceeding if:
(1) the individual's conduct was in good faith; and
(2) the individual reasonably believed:
(A) in the case of conduct in the individual's official capacity with
the corporation, that the individual's conduct was in its best interests; and
(B) in all other cases, that the individual's conduct was at least not
opposed to its best interests; and
(3) in the case of any criminal proceeding, the individual either:
(A) had reasonable cause to believe the individual's conduct was
lawful; or
(B) had no reasonable cause to believe the individual's conduct was
unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose the director reasonably believed to be in the interests of the
participants in and beneficiaries of the plan is conduct that satisfies the
requirement of subsection (a)(2)(B).
(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
Section 23-1-37-9 Mandatory Indemnification
Unless limited by its articles of incorporation, a corporation shall
indemnify a director who was wholly successful
on the merits or otherwise, in
the defense of any
proceeding to which theaction, suit or proceeding) is asserted by such director,
was a party because the
director isofficer or
was a director of the corporation against reasonable expenses
incurred by the directorcontrolling person in connection with the
proceeding.
Section 23-1-37-10 Advance Indemnification
(a) A corporation may pay for or reimburse the reasonable expenses incurred
by a director who is a party to a proceeding in advance of final disposition of
the proceeding if:
(1) the director furnishes the corporation a written affirmation of the
director's good faith belief that the director has met the standard of conduct
described in section 8 of this chapter;
II-2
(2) the director furnishes the corporation a written undertaking, executed
personally or on the director's behalf, to repay the advance if it is ultimately
determined that the director did not meet the standard of conduct; and
(3) a determination is made that the facts then known to those making the
determination would not preclude indemnification under this chapter.
(b) The undertaking required by subsection (a)(2) must be an unlimited
general obligation of the director but need not be secured and may be accepted
without reference to financial ability to make repayment.
(c) Determinations and authorizations of payments under this section shall
be madesecurities being registered, we will, unless in the manner specified in section 12opinion of this chapter.
Section 23-1-37-11 Application for Indemnification
Unless a corporation's articles of incorporation provide otherwise, a
director ofits counsel the corporation who is a party to a proceeding may apply for
indemnificationmatter has been settled by controlling precedent, submit to the court conductingof appropriate jurisdiction the proceeding or to another court of
competent jurisdiction. On receipt of an application, the court after giving any
notice the court considers necessary may orderquestion whether such indemnification ifby it determines:
(1) the director is entitled to mandatory indemnification under section 9
of this chapter, in which case the court shall also order the corporation to pay
the director's reasonable expenses incurred to obtain court-ordered
indemnification; or
(2) the director is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not the director met the
standard of conduct set forth in section 8 of this chapter.
Section 23-1-37-12 Procedure for Determining Indemnification
(a) A corporation may not indemnify a director under section 8 of this
chapter unless authorizedagainst public policy as expressed in the specific case after a determination has been
made that indemnification of the director is permissible in the circumstances
because the director has met the standard of conduct set forth in section 8 of
this chapter.
(b) The determination shallSecurities Act and will be made by any one (1) of the following
procedures:
(1) By the board of directors by majority vote of a quorum consisting
of directors not at the time parties to the proceeding.
(2) If a quorum cannot be obtained under subdivision (1), by majority
vote of a committee duly designatedgoverned by the boardfinal adjudication of such issue. At present, there is no pending litigation or proceeding involving any of our directors,
(in which
designation directors who are parties may participate), consisting solely of two
(2)officers or
more directors not at the time parties to the proceeding.
(3) By special legal counsel:
(A) selected by the board of directors or its committee in the
manner prescribed in subdivision (1) or (2); or
II-3
(B) if a quorum of the board of directors cannot be obtained
under subdivision (1) and a committee cannot be designated under subdivision
(2), selected by majority vote of the full board of directors (in which
selection directors who are parties may participate).
(4) By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the proceeding may not be
voted on the determination.
(d) Authorization of indemnification and evaluationemployees as to reasonableness of
expenses shall be made in the same manner as the determination thatwhich indemnification is permissible, except that if the determination is made by
special legal counsel, authorizationsought, nor are we aware of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection
(b)(3) to select counsel.
Section 23-1-37-13 Indemnification of Officers, Agents and Employees
Unless a corporation's articles of incorporation provide otherwise:
(1) an officer of the corporation, whetherany threatened litigation or not a director, is entitled
to mandatory indemnification under section 9 of this chapter, and is entitled to
apply for court-ordered indemnification under section 11 of this chapter, in
each case to the same extent as a director;
(2) the corporation may indemnify and advance expenses under this chapter
to an officer, employee, or agent of the corporation, whether or not a director,
to the same extent as to a director; and
(3) a corporation may also indemnify and advance expenses to an officer,
employee, or agent, whether or not a director, to the extent, consistent with
public policy,proceeding that may be provided by its articlesresult in claims for indemnification.
Recent Sales of incorporation, bylaws,
general or specific action of its board of directors, or contract.
Section 23-1-37-14 Insurance
A corporation may purchaseUnregistered Securities
None.
Exhibits and
maintain insurance on behalf of an
individual who is or was a director, officer, employee, or agent of the
corporation, or who, while a director, officer, employee, or agent of the
corporation, is or was serving at the request of the corporation as a director,
officer, partner, member, manager, trustee, employee, or agent of another
foreign or domestic corporation, partnership, limited liability company, joint
venture, trust, employee benefit plan, or other enterprise, against liability
asserted against or incurred by the individual in that capacity or arising from
the individual's status as a director, officer, member, manager, employee, or
agent, whether or not the corporation would have power to indemnify the
individual against the same liability under section 8 or 9 of this chapter. The:
(1) corporation may purchase insurance under this section from; and
(2) insurance purchased under this section may be reinsured in whole or in
part by;
an insurer that is owned by or otherwise affiliated with the corporation whether
the insurer does or does not do business with other persons.
II-4
Section 23-1-37-15 Indemnification Under Chapter Not Exclusive
(a) The indemnification and advance for expenses provided for or authorized
by this chapter does not exclude any other rights to indemnification and advance
for expenses that a person may have under:
(1) a corporation's articles of incorporation or bylaws;
(2) a resolution of the board of directors or of the shareholders; or
(3) any other authorization, whenever adopted, after notice, by a majority
vote of all the voting shares then issued and outstanding.
(b) If the articles of incorporation, bylaws, resolutions of the board of
directors or of the shareholders, or other duly adopted authorization of
indemnification or advance for expenses limit indemnification or advance for
expenses, indemnification and advance for expenses are valid only to the extent
consistent with the articles, bylaws, resolution of the board of directors or of
the shareholders, or other duly adopted authorization of indemnification or
advance for expenses.
(c) This chapter does not limit a corporation's power to pay or reimburse
expenses incurred by a director, officer, employee, or agent in connection with
the person's appearance as a witness in a proceeding at a time when the person
has not been made a named defendant or respondent to the proceeding.
ITEM 16. EXHIBITS.
- ------- --------
Exhibit No. Description
- ----------- -----------------------------------------------------
*3(a) Restated Articles of Incorporation of Registrant.
(b) Amended and Restated By-laws of the Registrant
(incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K filed on
December 22, 2004).
*4 Specimen Certificate for Common Shares, $0.01 par
value per share, of Lynch Corporation.
*5 Opinion of Olshan Grundman Frome Rosenzweig & Wolosky
LLP.
*23(a) Consent of Ernst & Young LLP.
*23(b) Consent of Olshan Grundman Frome Rosenzweig & Wolosky
LLP, included in Exhibit 5 to this Registration
Statement.
*24 Powers of Attorney, included on the signature page to
this Registration Statement.
- ---------------
* Filed herewith.
II-5
ITEM 17. UNDERTAKINGS.
Financial Statement Schedules | |
| 1.1* | Form of Underwriting Agreement. |
| 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 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 on August 31, 2007). |
| 4.1** | Form of Certificate for Common Stock. |
| 4.2 * | Form of Warrant. |
| 4.3 * | Form of Warrant Agreement. |
| 4.4 * | Form of Unit Agreement. |
| 4.5 * | Form of Unit Certificate. |
| 5.1** | Opinion of Olshan Grundman Frome Rosenzweig & Wolosky LLP. |
| 23.1 | Consent of Independent Registered Public Accounting Firm – J.H. Cohn LLP. |
| 23.2** | Consent of Olshan Grundman Frome Rosenzweig & Wolosky LLP (included in Exhibit 5.1). |
_____________
| * To be filed by amendment or by a report filed under the Exchange Act and incorporated herein by reference. |
Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
| (i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
| A. | Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement; and |
| B. | Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement. |
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA
FIDEbona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(b) The
(4) That, for the purpose of determining liability under the Securities Act to any purchaser:
| (i) | Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the Registration Statement as of the date the filed prospectus was deemed part of and included in the Registration Statement; and |
| (ii) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a Registration Statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the Registration Statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the Registration Statement relating to the securities in the Registration Statement to which that prospectus relates, and the offering of such securities at that time shall be deemed t o be the initial bona fide offering thereof. Provided, however, that no statement made in a Registration Statement or prospectus that is part of the Registration Statement or made in a document incorporated or deemed incorporated by reference into the Registration Statement or prospectus that is part of the Registration Statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the Registration Statement or prospectus that was part of the Registration Statement or made in any such document immediately prior to such effective date. |
(5) That, for the purpose of determining liability of the registrant under the Securities Act, that in a primary offering of our securities pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, we will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant hereby undertakesrelating to the offering required to be filed pursuant to Rule 424;
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(b) That, for purposes of determining any liability under the Securities Act, each filing of the
registrant'sour annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan'splan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statementRegistration Statement shall be deemed to be a new registration
statementRegistration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDEbona fide offering thereof.
(c) To supplement the prospectus, after the expiration of the subscription period, to set forth the results of the subscription offer, the transactions by the underwriters during the subscription period, the amount of unsubscribed securities to be purchased by the underwriters, and the terms of any subsequent reoffering thereof. If any public offering by the underwriters is to be made on terms differing from those set forth on the cover page of the prospectus, a post-effective amendment will be filed to set forth the terms of such offering.
(d) Insofar as indemnification for liabilities arising under the Securities Act
as amendedof 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of
anany action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the
Securities
Act and will be governed by the final adjudication of such issue.
II-6
(e) That:
(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(f) To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act of 1939 in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of such Act.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1933,1934, the registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 andRegistrant has duly caused this amendment to the registration statement to be signed on its behalf by the undersigned thereunto duly authorized, in the Town of Greenwich, State of Connecticut on the 28th day of
December, 2004.
LYNCH CORPORATION
By: /s/ John C. Ferrara
------------------------------------------
John C. Ferrara
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John C. Ferrara and Eugene Hynes as his true and
lawful attorney-in-fact, each acting alone, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments, including post-effective amendments
to this registration statement, and any related registration statement filed
pursuant to Rule 462(b) of the Act and to file the same, with exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorneys-in-fact or
their substitutes, each acting along, may lawfully do or cause to be done by
virtue hereof.
authorized.
| THE LGL GROUP, INC. |
| |
| |
| October 25 , 2010 | By: | /s/ Gregory P. Anderson |
| | Gregory P. Anderson President and Chief Executive Officer (Principal Executive Officer) |
| | |
Pursuant to the requirements of the Securities Exchange Act of 1933,1934, this amendment to the registration statement has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ John C. Ferrara December 28, 2004
- ------------------------------------------------
John C. Ferrara Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Eugene Hynes December 28, 2004
- ------------------------------------------------
Eugene Hynes Vice President, Treasurer and Secretary
(Principal Financial and Accounting Officer)
/s/ Marc Gabelli December 28, 2004
- ------------------------------------------------
Marc Gabelli Chairman of the Board of Directors
/s/ E. Val Cerutti December 21, 2004
- ------------------------------------------------
E. Val Cerutti Director
/s/ Avrum Gray December 28, 2004
- ------------------------------------------------
Avrum Gray Director
/s/ Anthony R. Pustorino December 18, 2004
- ------------------------------------------------
Anthony R. Pustorino Director
indicated:
| | |
| | |
| | |
| | |
| /s/ Gregory P. Anderson | President and Chief Executive Officer (Principal Executive Officer) | |
| GREGORY P. ANDERSON | October 25 , 2010 |
| | |
| | |
| | |
| /s/ R. LaDuane Clifton | Chief Accounting Officer (Principal Financial and Accounting Officer) | |
| R. LADUANE CLIFTON | October 25 , 2010 |
| | |
| | |
| Chairman of the Board of Directors (Non-Executive) | |
| MARC J. GABELLI | |
| | |
| | |
| | |
| /s/ Timothy Foufas | Vice-Chairman of the Board of Directors (Non-Executive) | |
| TIMOTHY FOUFAS | October 25 , 2010 |
| | |
| | |
| /s/ Patrick J. Guarino | Vice-Chairman of the Board of Directors (Non-Executive) | |
| PATRICK J. GUARINO | October 25 , 2010 |
| | |
| | |
| /s/ Jeremiah M. Healy | Director | |
| JEREMIAH M. HEALY | October 25 , 2010 |
| | |
| | |
| | |
| | |
| | |
| /s/ Paul D. Kaminski | Director | |
| PAUL D. KAMINSKI | October 25, 2010 |
| | |
| | |
| | |
| /s/ Anthony Pustorino | Director | |
| ANTHONY PUSTORINO | October 25 , 2010 |
| | |
| | |
| | |
| /s/ Javier Romero | Director | |
| JAVIER ROMERO | October 25 , 2010 |
| | |
| | |
| | |
| /s/ Hans Wunderl | Director | |
| HANS WUNDERL | October 25 , 2010 |
| | |
| | |
| | |
| /s/ Robert S. Zuccaro | Director | |
| ROBERT S. ZUCCARO | October 25, 2010 |
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
*3(a) Restated Articles of Incorporation of Registrant.
(b) Amended and Restated By-laws of the Registrant
(incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K filed on
December 22, 2004).
*4 Specimen Certificate for Common Shares, $0.01 par
value per share, of Lynch Corporation.
*5 Opinion of Olshan Grundman Frome Rosenzweig & Wolosky
LLP.
*23(a) Consent of Ernst & Young LLP.
*23(b) Consent of Olshan Grundman Frome Rosenzweig & Wolosky
LLP, included in Exhibit 5 to this Registration
Statement.
*24 Powers of Attorney, included on the signature page to
this Registration Statement.
- ---------------------
* Filed herewith.
| |
| 1.1* | Form of Underwriting Agreement. |
| 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 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 on August 31, 2007). |
| 4.1** | Form of Certificate for Common Stock. |
| 4.2 * | Form of Warrant. |
| 4.3 * | Form of Warrant Agreement. |
| 4.4 * | Form of Unit Agreement. |
| 4.5 * | Form of Unit Certificate. |
| 5.1** | Opinion of Olshan Grundman Frome Rosenzweig & Wolosky LLP. |
| 23.1 | Consent of Independent Registered Public Accounting Firm – J.H. Cohn LLP. |
| 23.2** | Consent of Olshan Grundman Frome Rosenzweig & Wolosky LLP (included in Exhibit 5.1). |
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| * To be filed by amendment or by a report filed under the Exchange Act and incorporated herein by reference. |