LGL Group posts $45K Q3 2026 common-stockholder loss
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
The LGL Group, Inc. (LGL) reported third-quarter 2026 total revenue of $1.464 million, up 32.1% from $1.108 million a year earlier, as net investment income increased to $744,000 from $442,000. Net sales were $720,000, up 8.9%. Total expenses rose 45.6% to $1.439 million, and LGL common stockholders recorded a $45,000 loss versus $772,000 income in 2025. Gross margin fell to 31.8% from 52.8%, reflecting product and pricing mix and higher inventory reserves.
For the nine months, LGL recorded a $1.020 million loss attributable to common stockholders, versus $715,000 income in 2025. Cash and restricted cash totaled $86.950 million at September 30, 2026, compared with $41.514 million at December 31, 2025. The July rights offering issued 6,062,714 common shares and generated approximately $41.8 million in gross and $41.5 million in net proceeds.
One customer accounted for 73.5% of third-quarter net sales, while one customer represented 90.7% of gross receivables at September 30, 2026. LGL completed its Nevada redomestication effective September 1, 2026; each outstanding share continued as one share. The company targeted a fourth-quarter 2026 transition of remaining M-tron Industries services, subject to operational and contractual steps.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Major pointThe rights offering generated approximately $41.8 million in gross proceeds. 47% of market cap
- Moderate pointThird-quarter total revenue increased 32.1% to $1.464 million.
Negative
- Moderate pointLGL common-stockholder earnings shifted to a $45,000 quarterly loss from $772,000 income.
- Moderate pointGross margin fell from 52.8% to 31.8%.
- Moderate pointOne customer represented 73.5% of third-quarter net sales.
- Moderate pointOne customer represented 90.7% of gross receivables at September 30, 2026.
Filing Explained
The Skyline note’s reported maximum loss exposure is $2,520 (in thousands), including $1,666 (in thousands) attributed to non-controlling SPV investors.
The July rights offering is complete: LGL issued 6,062,714 shares and reported 12,613,149 common shares outstanding at
The report also shows that LGL consolidates Skyline SPV, a pooled vehicle holding a convertible note issued by Skyline; LGL’s reported 33.9% interest is in the SPV, not a direct ownership stake in Skyline.
The note’s maximum loss exposure was reported as
LGL reports that it consolidates the SPV because Lynch Capital has exclusive authority to manage, convert or dispose of the note; the filing says the SPV’s rights at Skyline do not make LGL Skyline’s primary beneficiary.
Key Figures
Key Terms
gross margin financial
subscription rights offering financial
bonus element financial
Level 3 financial
variable interest entity financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were LGL's third-quarter 2026 results?
How much did LGL raise in its 2026 rights offering?
How much cash did LGL have at September 30, 2026?
When is LGL's transition from M-tron Industries services targeted?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from ____________ to ____________
Commission File No.
The LGL Group, Inc.
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of October 30, 2026, the registrant had
Table of Contents
The LGL Group, Inc.
Form 10-Q for the Period Ended September 30, 2026
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FINANCIAL INFORMATION |
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Financial Statements (Unaudited) |
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Condensed Consolidated Statements of Operations |
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Condensed Consolidated Statements of Stockholders’ Equity |
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Condensed Consolidated Statements of Cash Flows |
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Notes to the Condensed Consolidated Financial Statements |
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1. | Overview and Basis of Presentation |
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2. | Summary of Significant Accounting Policies |
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3. | Segment Information |
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4. | Investments |
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5. | Fair Value Measurements |
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6. | Variable Interest Entities |
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7. | Related Party Transactions |
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8. | Income Taxes |
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9. | Stock-Based Compensation |
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10. | Stockholders' Equity |
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11. | Earnings Per Share |
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12. | Contingencies |
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13. | Other Financial Statement Information |
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14. | Domestic and Foreign Revenues |
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15. | Subsequent Events |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Quantitative and Qualitative Disclosures About Market Risk |
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Controls and Procedures |
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OTHER INFORMATION |
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Item 1. |
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Legal Proceedings |
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Risk Factors |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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Defaults Upon Senior Securities |
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Mine Safety Disclosures |
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Other Information |
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Exhibits |
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Signatures |
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Table of Contents
Cautionary Statement Concerning Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q of The LGL Group, Inc. ("LGL Group" or the "Company") and the Company's other communications and statements, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends for all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable by law. Such statements include, in particular, statements about the Company's beliefs, plans, objectives, goals, expectations, estimates, projections and intentions. These statements are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond the Company's control. The words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan," "target," "goal" and similar expressions are intended to identify forward-looking statements. All forward-looking statements, by their nature, are subject to risks and uncertainties. Therefore, such statements are not intended to be a guarantee of the Company's performance in future periods. The Company's actual future results may differ materially from those set forth in the Company's forward-looking statements. For information concerning these factors and related matters, see "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission ("SEC") on March 30, 2026, this Quarterly Report on Form 10-Q and our other filings with the SEC. However, other factors besides those referenced could adversely affect the Company's results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statements made by the Company herein speak as of the date of this Quarterly Report on Form 10-Q. The Company does not undertake to update any forward-looking statement, except as required by law. As a result, you should not place undue reliance on these forward-looking statements.
1
Table of Contents
PART I
FINANCIAL INFORMATION
Item 1. |
Financial Statements |
The LGL Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share data) |
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Assets: |
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Current assets: |
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Marketable securities |
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Accounts receivable, net of allowance of $ and $, respectively |
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Inventories, net |
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Prepaid expenses and other current assets |
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Warrant proceeds receivable |
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Total current assets |
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Convertible promissory note, at fair value |
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Right-of-use lease assets |
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Intangible assets, net |
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Deferred income tax assets |
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Other assets |
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Total assets |
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Liabilities: |
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Current liabilities: |
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Accounts payable |
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Accrued compensation and commissions |
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Income taxes payable |
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Contract liabilities |
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Other accrued expenses |
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Total current liabilities |
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Other liabilities |
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Total liabilities |
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Contingencies (Note 12) |
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Stockholders' equity: |
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Common stock ($ par value; shares authorized; shares issued and shares outstanding as of September 30, 2026; shares issued and shares outstanding as of December 31, 2025) |
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Treasury stock, at cost ( shares as of September 30, 2026 and December 31, 2025) |
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Additional paid-in capital |
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Accumulated deficit |
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Total LGL Group stockholders' equity |
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Non-controlling interests |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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See accompanying Notes to the Condensed Consolidated Financial Statements.
2
Table of Contents
The LGL Group, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||
(in thousands, except share and per share data) |
| 2026 |
| 2025 |
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Revenues: |
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Net sales |
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Net investment income |
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Net gains |
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Total revenues |
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Expenses: |
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Manufacturing cost of sales |
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Engineering, selling and administrative |
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Total expenses |
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Income (loss) before income taxes |
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Income tax expense (benefit) |
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Net income (loss) |
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Less: Net income attributable to non-controlling interests |
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Net (loss) income attributable to LGL Group common stockholders |
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(Loss) income per common share attributable to LGL Group common stockholders: | ||||||||||||||||
Basic |
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Diluted |
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Weighted average shares outstanding (a): | ||||||||||||||||
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(a) |
Weighted average shares outstanding and basic and diluted earnings per share for periods prior to July 15, 2026 (the expiration date of the transferable subscription rights offering) have been retroactively adjusted for the bonus element associated with the transferable subscription rights offering. Refer to Note 11 - Earnings Per Share for further information. |
See accompanying Notes to the Condensed Consolidated Financial Statements.
3
Table of Contents
The LGL Group, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands) |
| Common Stock |
| Treasury Stock |
| Additional Paid-In Capital |
| Accumulated Deficit |
| Total LGL Stockholders' Equity |
| Non-Controlling Interests |
| Total Equity | ||||||||||||||
Balance as of June 30, 2026 |
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Net (loss) income attributable to LGL Group or non-controlling interests |
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Stock-based compensation |
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Shares withheld for employee taxes |
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Exercise of warrants, net of costs |
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Exercise of subscription rights, net of costs |
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Repurchases of common stock |
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Consolidation of non-controlling interests - Skyline SPV |
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Balance as of September 30, 2026 |
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(in thousands) |
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Non-Controlling Interests |
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Total Equity |
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Balance as of June 30, 2025 |
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Net income attributable to LGL Group or non-controlling interests |
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Stock-based compensation |
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Shares withheld for employee taxes |
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Exercise of warrants, net of costs |
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Exercise of subscription rights, net of costs |
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Repurchases of common stock |
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Consolidation of non-controlling interests - Skyline SPV |
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Balance as of September 30, 2025 |
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See accompanying Notes to the Condensed Consolidated Financial Statements.
4
Table of Contents
The LGL Group, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands) |
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Common Stock |
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Treasury Stock |
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Additional Paid-In Capital |
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Accumulated Deficit |
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Total LGL Stockholders' Equity |
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Non-Controlling Interests |
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Total Equity |
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Balance as of December 31, 2025 |
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Net (loss) income attributable to LGL Group or non-controlling interests |
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Stock-based compensation |
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Shares withheld for employee taxes |
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Exercise of warrants, net of costs |
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Exercise of subscription rights, net of costs |
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Repurchases of common stock |
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Consolidation of non-controlling interests - Skyline SPV |
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Balance as of September 30, 2026 |
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(in thousands) |
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Common Stock |
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Accumulated Deficit |
|
Total LGL Stockholders' Equity |
|
Non-Controlling Interests |
|
Total Equity |
||||||||||||||
Balance as of December 31, 2024 |
|
$ |
|
|
$ | ( |
) |
|
$ |
|
|
$ | ( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Net income attributable to LGL Group or non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Shares withheld for employee taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Exercise of warrants, net of costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Exercise of subscription rights, net of costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Repurchases of common stock |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Consolidation of non-controlling interests - Skyline SPV |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balance as of September 30, 2025 |
|
$ |
|
|
$ | ( |
) |
|
$ |
|
|
$ | ( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
5
Table of Contents
The LGL Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
| Nine Months Ended September 30, | ||||||
(in thousands) |
| 2026 |
| 2025 | ||||
Cash flows from operating activities: |
|
|
| |
|
|
| |
Net (loss) income |
| $ | ( | ) |
| $ |
| |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
| |
|
|
| |
Noncash revenues, expenses, gains and losses included in income: |
|
|
| |
|
|
| |
Amortization of finite-lived intangible assets |
|
|
|
|
|
| ||
Stock-based compensation |
|
|
|
|
|
| ||
Unrealized gain on marketable securities |
|
| ( | ) |
|
| ( | ) |
Accrued interest on convertible promissory note |
|
| ( | ) |
|
|
| |
Deferred income taxes |
|
| ( | ) |
|
| ( | ) |
Changes in operating assets and liabilities: |
|
|
| |
|
|
| |
Decrease in accounts receivable, net |
|
|
|
|
|
| ||
Increase in inventories, net |
|
| ( | ) |
|
| ( | ) |
Decrease in prepaid expenses and other assets |
|
|
|
|
|
| ||
Increase in contract liabilities |
|
|
|
|
|
| ||
Increase in accounts payable, accrued compensation, income taxes and commissions and other |
|
|
|
|
|
| ||
Total adjustments |
|
|
|
|
| ( | ) | |
Net cash provided by operating activities |
|
|
|
|
|
| ||
Cash flows from investing activities: |
|
|
| |
|
|
| |
Purchase of convertible promissory note |
|
| ( | ) |
|
|
| |
Purchases, other |
|
| ( | ) |
|
|
| |
Net cash used in investing activities |
|
| ( | ) |
|
|
| |
Cash flows from financing activities: |
|
|
| |
|
|
| |
Proceeds (payment) from exercise of warrants, net of costs |
|
|
|
|
| ( | ) | |
Proceeds from exercise of subscription rights, net of costs |
|
|
|
|
|
| ||
Capital contributions from non-controlling interests - Skyline SPV |
|
|
|
|
|
| ||
Payment for taxes related to net share settlement of equity awards |
|
| ( | ) |
|
|
| |
Payment for repurchase of common stock |
|
|
|
|
| ( | ) | |
Net cash provided by (used in) financing activities |
|
|
|
|
| ( | ) | |
Increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents |
|
|
|
|
| ( | ) | |
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period |
|
|
|
|
|
| ||
Cash and cash equivalents and restricted cash and cash equivalents at end of period |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Non-cash financing activity: |
|
|
| |
|
|
| |
Proceeds from exercise of warrants receivable |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Supplemental disclosure: |
|
|
| |
|
|
| |
Income taxes paid |
| $ |
|
| $ |
| ||
See accompanying Notes to the Condensed Consolidated Financial Statements.
6
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
1. Overview and Basis of Presentation
Overview
The LGL Group, Inc. is a holding company that acquires, owns, and builds businesses and makes strategic investments, with an emphasis on critical technologies. The Company was incorporated in 1928 under the laws of the State of Indiana, reincorporated under the laws of the State of Delaware in 2007, and subsequently reincorporated under the laws of the State of Nevada in September 2026, following approval by the Company's stockholders at its 2026 Annual Meeting of Stockholders. The Company operates through two complementary business activities: Platform Operations and Merchant Investment. Unless the context indicates otherwise, the terms "LGL," "LGL Group," "we," "us," "our," or the "Company" mean The LGL Group, Inc. and its consolidated subsidiaries.
The Company’s Platform Operations business develops businesses through organic growth, operational improvement, and complementary acquisitions. It is anchored by its subsidiary Precise Time and Frequency, LLC ("PTF"), which has operations in Wakefield, Massachusetts. PTF is engaged in the design of high-performance Frequency and Time Reference Standards that form the basis for timing and synchronization in various applications.
The Company's Merchant Investment business deploys capital through minority investments, co-investments, and strategic partnerships, including through special purpose vehicles that may be syndicated for investment and involve certain fee-generating activities. The Company could act as the financial and management sponsor, raise capital from external nonaffiliated investors, and may receive management fees and success-based incentives in accordance with market practice. The Merchant Investment business is operated through its subsidiary Lynch Capital International, LLC ("Lynch Capital").
Skyline Transaction
In June 2026, Lynch Capital sponsored a syndicated transaction to raise up to $
Investor capital is pooled in Skyline Instruments May 2026, a Series of CGF2021 LLC ("Skyline SPV"), which holds the Skyline Note. Lynch Capital serves as investment advisor to Skyline SPV pursuant to an investment advisory agreement (the "Skyline IAA"). Under a side letter between Skyline SPV and Skyline (the "Side Letter"), Skyline SPV holds a board designation right, participation rights in future financings, and approval rights over certain extraordinary events at Skyline, and the Company’s Chief Executive Officer serves as Skyline SPV’s designee on Skyline’s board of directors.
Skyline SPV raised $
Basis of Presentation
These unaudited Condensed Consolidated Financial Statements do not include all disclosures that are normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and should be read in conjunction with the audited Consolidated Financial Statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report") filed with the Securities and Exchange Commission (the "SEC") on March 30, 2026. The consolidated financial information as of December 31, 2025 included herein has been derived from the audited Consolidated Financial Statements in the 2025 Annual Report.
7
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
The Condensed Consolidated Financial Statements include the accounts of The LGL Group, Inc., its majority-owned subsidiaries, and variable interest entities ("VIEs") of which we are the primary beneficiary.
In the opinion of management, these Condensed Consolidated Financial Statements contain all adjustments (consisting of normal recurring adjustments, including eliminations of material intercompany accounts and transactions) considered necessary for a fair statement of the results presented herein. Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
2. Summary of Significant Accounting Policies
During the three and nine months ended September 30, 2026, there were no material changes to our significant accounting policies included in the 2025 Annual Report, except as noted below. For additional information, refer to Note 2 to the audited Consolidated Financial Statements in the 2025 Annual Report.
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and highly liquid investments with no maturity or with a maturity of less than three months when purchased.
Restricted cash and cash equivalents primarily consist of funds held by Skyline SPV as an expense holdback, restricted for payment of Skyline SPV's formation, administrative, and other expenses.
The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents reported in our Condensed Consolidated Balance Sheet to the total shown in our Condensed Consolidated Statement of Cash Flows:
|
| September 30, 2026 |
| December 31, 2025 | ||||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Restricted cash and cash equivalents |
|
|
|
|
|
| ||
Total cash and cash equivalents and restricted cash and cash equivalents shown in the statements of cash flows |
| $ |
|
| $ |
| ||
Fair Value Option
In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 825, Financial Instruments ("ASC 825"), the Company may elect to measure at fair value eligible financial assets and financial liabilities that are not otherwise required to be measured at fair value. The election is made on an instrument-by-instrument basis, generally at initial recognition, and is irrevocable. For instruments measured under the fair value option, changes in fair value are recognized in Net gains (losses), and interest income is recognized in Net investment income, in the Condensed Consolidated Statements of Operations.
Convertible Promissory Note
The Company elected the fair value option for the Skyline Note upon acquisition because fair value better reflects the economics of a convertible instrument, including its embedded conversion feature, and avoids separately accounting for that feature as an embedded derivative. The Skyline Note is classified as non-current on the Condensed Consolidated Balance Sheets. Refer to Note 4 - Investments and Note 5 - Fair Value Measurements for further information.
8
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Concentration Risks
Customer Concentrations
For the three months ended September 30, 2026, customer accounted for 10% or more of the Company's Net sales, representing $
For the nine months ended September 30, 2026, customers each accounted for 10% or more of the Company's Net sales, representing $
Customers exceeding 10% of Net sales are identified separately for each period presented. A customer that exceeded the threshold in one period was not necessarily the same customer, or a 10% customer at all, in any other period presented, including as between the three-month and nine-month periods.
Credit Concentration
A significant portion of the Company's accounts receivable is concentrated with a relatively small number of customers. As of September 30, 2026, of the Company's customers accounted for approximately $
The Company maintains its cash and cash equivalents with high-credit-quality financial institutions, and at times cash balances on deposit may exceed federally insured limits. A significant portion of the Company's cash and cash equivalents is invested in money market mutual funds. Amounts invested in money market mutual funds are not deposits, are not federally insured, and are subject to the credit and market risks of the underlying fund.
Contract Liabilities
The Company records a contract liability when it receives consideration, or has an unconditional right to consideration, from a customer before it satisfies the related performance obligation. The Company’s contract liabilities consist of advance payments received from customers and are expected to be recognized as revenue within twelve months. The Company recognizes the related revenue when (or as) it satisfies the performance obligation, generally upon shipment, when control of the product passes to the customer.
As of September 30, 2026 and December 31, 2025, contract liabilities were $
Accounting Standards Adopted
Income Taxes
In December 2023, the FASB issued Accounting Standards Update ("ASU") 2023-09, "Income Taxes (Topic 740) - Improvements to Income Tax Disclosures" ("ASU 2023-09"). The standard requires disaggregated information about a company's effective tax rate reconciliation as well as information on income taxes paid. The provisions of the standard are effective for public companies for fiscal years beginning after December 15, 2024, with early adoption permitted. This standard applies prospectively; however, retrospective application is permitted. The Company adopted ASU 2023-09 in December 2025. Refer to Note 8 - Income Taxes to the Company's Consolidated Financial Statements included in its 2025 Annual Report for further information.
9
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Future Application of Accounting Standards
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" ("ASU 2024-03"). The standard requires additional disclosure of certain costs and expenses within the notes to the financial statements. The provisions of the standard are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. This accounting standards update may be applied either prospectively or retrospectively. We are assessing the impact of this standard.
3. Segment Information
Chief Operating Decision Maker
The Company's chief operating decision maker ("CODM") is the Chief Executive Officer.
Reportable Segments
The Company reports its results from operations consistent with the manner in which the CODM reviews the business to assess performance and allocate resources. As such, the Company reports its results in reportable business segments: Electronic Instruments and Merchant Investment. The Company's Platform Operations business activity is currently conducted through the Electronic Instruments reportable segment. A brief description of each segment is below:
The Electronic Instruments segment includes all products manufactured and sold by PTF.
The Merchant Investment segment includes all activity produced by Lynch Capital.
The Company includes in Corporate the following corporate and business activities:
| • | corporate-level assets and financial obligations such as cash and cash equivalents invested in highly liquid U.S. Treasury money market funds and other marketable securities; |
| • | other items not allocated to or directly related to the Company's operating segments, including items such as deferred tax balances; and |
| • | intercompany eliminations. |
Measure of Segment Profit or Loss and Segment Assets
The accounting policies used in both the Electronic Instruments and Merchant Investment segments are the same as those described in Note 2 – Summary of Significant Accounting Policies.
The CODM assesses the performance of and decides how to allocate resources to each reporting segment based on Segment profit (loss), which is total revenues less Manufacturing cost of sales and Engineering, selling and administrative. The CODM uses Segment profit (loss) to evaluate the overall profitability of the Electronic Instruments and Merchant Investment segments. Additionally, the CODM uses Segment profit (loss) to allocate resources in the annual budgeting and forecasting process. The CODM considers budget-to-actual variances when making decisions about allocating capital to each segment.
The measure of segment assets is reported on the Condensed Consolidated Balance Sheets as consolidated Total assets. Certain overhead expenses incurred by the parent entity are allocated to the reportable segments based on each segment’s assets as a percentage of total assets. Overhead expenses that are not allocated remain in Corporate.
10
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
The following tables present LGL Group's operations by segment:
|
| Three Months Ended September 30, 2026 | ||||||||||||||
|
| Electronic Instruments |
| Merchant Investment |
| Corporate |
| Consolidated | ||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Net investment income |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net gains |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing cost of sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Engineering |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commissions |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accounting |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Compensation |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Corporate allocations (a) |
|
|
|
|
|
|
|
| ( | ) |
|
|
| |||
Other segment items (b) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Engineering, selling and administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Segment (loss) profit |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Segment profit (loss) to Income (loss) before income taxes | ||||||||||||||||
Adjustments and reconciling items |
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
| |
|
| Three Months Ended September 30, 2025 | ||||||||||||||
|
| Electronic Instruments |
| Merchant Investment |
| Corporate |
| Consolidated | ||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Net investment income |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net gains |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing cost of sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Engineering |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commissions |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accounting |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Compensation |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Corporate allocations (a) |
|
|
|
|
|
|
|
| ( | ) |
|
|
| |||
Other segment items (b) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Engineering, selling and administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Segment profit (loss) |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Segment profit (loss) to Income (loss) before income taxes | ||||||||||||||||
Adjustments and reconciling items |
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
| |
(a) | Represents overhead expenses incurred by the parent company that are allocated to the Electronic Instruments and Merchant Investment segments based on each segment’s assets as a percentage of Total assets. |
(b) | Other segment items for each reportable segment and Corporate includes the following: | |
|
| Electronic Instruments - rent, amortization, professional service fees, and certain other overhead expenses. |
|
| Merchant Investment - legal expense and certain other overhead expenses. |
|
| Corporate - legal expense, insurance expense, filing fees, fees paid to M-tron Industries, Inc. under the Amended and Restated Transitional Administrative and Management Services Agreement, expense reimbursements paid to or received from M-tron Industries, Inc., and certain other overhead expenses. |
11
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
|
| Nine Months Ended September 30, 2026 | ||||||||||||||
|
| Electronic Instruments |
| Merchant Investment |
| Corporate |
| Consolidated | ||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Net investment income |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net gains |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing cost of sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Engineering |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commissions |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accounting |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Compensation |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Corporate allocations (a) |
|
|
|
|
|
|
|
| ( | ) |
|
|
| |||
Other segment items (b) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Engineering, selling and administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Segment (loss) profit |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Segment profit (loss) to Income (loss) before income taxes |
| |||||||||||||||
Adjustments and reconciling items |
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
Loss before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | ( | ) |
|
| Nine Months Ended September 30, 2025 | ||||||||||||||
|
| Electronic Instruments |
| Merchant Investment |
| Corporate |
| Consolidated | ||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Net investment income |
|
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|
|
|
|
|
|
|
|
|
| ||||
Net gains |
|
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|
|
|
|
|
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|
|
|
| ||||
Total revenues |
|
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|
|
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|
|
| ||||
|
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|
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|
|
|
Less: |
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|
|
|
|
|
|
|
|
|
|
|
Manufacturing cost of sales |
|
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|
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|
|
|
|
|
| ||||
Engineering |
|
|
|
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|
|
|
|
|
|
|
| ||||
Commissions |
|
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|
|
|
|
|
|
|
| ||||
Sales and marketing |
|
|
|
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|
|
|
|
|
|
|
| ||||
Accounting |
|
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|
|
| ||||
Compensation |
|
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|
|
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|
|
|
| ||||
Corporate allocations (a) |
|
|
|
|
|
|
|
| ( | ) |
|
|
| |||
Other segment items (b) |
|
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|
|
|
|
| ||||
Engineering, selling and administrative |
|
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|
|
| ||||
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Segment profit (loss) |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Segment profit (loss) to Income (loss) before income taxes | ||||||||||||||||
Adjustments and reconciling items |
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
| |
(a) | Represents overhead expenses incurred by the parent company that are allocated to the Electronic Instruments and Merchant Investment segments based on each segment’s assets as a percentage of Total assets. |
(b) | Other segment items for each reportable segment and Corporate includes the following: | |
|
| Electronic Instruments - rent, amortization, professional service fees, and certain other overhead expenses. |
|
| Merchant Investment - legal expense and certain other overhead expenses. |
|
| Corporate - legal expense, insurance expense, filing fees, fees paid to M-tron Industries, Inc. under the Amended and Restated Transitional Administrative and Management Services Agreement, expense reimbursements paid to or received from M-tron Industries, Inc., and certain other overhead expenses. |
12
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Other Segment Disclosures
The following tables present other segment information by segment for the periods indicated:
|
| Three Months Ended September 30, 2026 | ||||||||||||||||||||||
|
| Electronic Instruments |
| Merchant Investment |
| Corporate |
| Total |
| Adjustments and Reconciling Items |
| Consolidated | ||||||||||||
Interest revenue (a) |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
Amortization (b) |
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Other significant non-cash items: | ||||||||||||||||||||||||
Stock-based compensation (c) |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |||
|
| Three Months Ended September 30, 2025 | ||||||||||||||||||||||
|
| Electronic Instruments |
| Merchant Investment |
| Corporate |
| Total |
| Adjustments and Reconciling Items |
| Consolidated | ||||||||||||
Interest revenue (a) |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
Amortization (b) |
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Other significant non-cash items: | ||||||||||||||||||||||||
Stock-based compensation (c) |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
(a) | Interest revenue is included in Net investment income on the Condensed Consolidated Statements of Operations. |
(b) | Amortization is included within the other segment expense captions such as Manufacturing cost of sales, Engineering or Other segment items. |
(c) | Stock-based compensation is included within the Compensation expense caption. |
13
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
|
| Nine Months Ended September 30, 2026 | ||||||||||||||||||||||
|
| Electronic Instruments |
| Merchant Investment |
| Corporate |
| Total |
| Adjustments and Reconciling Items |
| Consolidated | ||||||||||||
Interest revenue (a) |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
Amortization (b) |
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Other significant non-cash items: | ||||||||||||||||||||||||
Stock-based compensation (c) |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |||
|
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||
|
| Electronic Instruments |
| Merchant Investment |
| Corporate |
| Total |
| Adjustments and Reconciling Items |
| Consolidated | ||||||||||||
Interest revenue (a) |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
Amortization (b) |
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Other significant non-cash items: | ||||||||||||||||||||||||
Stock-based compensation (c) |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
(a) | Interest revenue is included in Net investment income on the Condensed Consolidated Statements of Operations. |
(b) | Amortization is included within the other segment expense captions such as Manufacturing cost of sales, Engineering or Other segment items. |
(c) | Stock-based compensation is included within the Compensation expense caption. |
14
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
The following tables present LGL Group's identifiable assets by segment as of September 30, 2026 and December 31, 2025:
|
| September 30, 2026 | ||||||||||||||||||||||
|
| Electronic Instruments |
| Merchant Investment |
| Corporate |
| Total |
| Adjustments and Reconciling Items |
| Consolidated | ||||||||||||
Total assets |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
|
| December 31, 2025 | ||||||||||||||||||||||
|
| Electronic Instruments |
| Merchant Investment |
| Corporate |
| Total |
| Adjustments and Reconciling Items |
| Consolidated | ||||||||||||
Total assets |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
4. Investments
Marketable Securities
Details of marketable securities held as of September 30, 2026 or December 31, 2025 are as follows:
|
| September 30, 2026 | ||||||||||
|
|
|
|
|
|
|
|
|
| Cumulative | ||
|
|
|
|
|
|
|
|
|
| Unrealized | ||
|
| Fair Value |
| Basis |
| Gain | ||||||
Equity securities |
| $ |
|
| $ |
|
| $ |
| |||
Total |
| $ |
|
| $ |
|
| $ |
| |||
|
| December 31, 2025 | ||||||||||
|
|
|
|
|
|
|
|
|
| Cumulative | ||
|
|
|
|
|
|
|
|
|
| Unrealized | ||
|
| Fair Value |
| Basis |
| Gain | ||||||
Equity securities |
| $ |
|
| $ |
|
| $ |
| |||
Total |
| $ |
|
| $ |
|
| $ |
| |||
Other Securities Measured at Fair Value
The following table presents the fair value of securities based on our election of the fair value option:
|
| September 30, 2026 |
| December 31, 2025 | ||||||||||||
|
| Fair Value |
| % of Total |
| Fair Value |
| % of Total | ||||||||
Convertible promissory note |
| $ |
|
|
| % |
| $ |
|
|
| % | ||||
Total |
| $ |
|
|
| % |
| $ |
|
|
| % | ||||
15
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Net Investment Income
Net investment income represents income primarily from the following sources:
| • | Income earned from investments in money market funds (recorded in Cash and cash equivalents) |
| • | Income earned on the Skyline Note |
| • | Dividends received from Marketable securities |
| • | Income from unconsolidated or equity method investments |
The following table presents the components of Net investment income:
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||
|
| 2026 |
| 2025 |
| 2026 |
| 2025 | ||||||||
Interest on cash and cash equivalents |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Interest on convertible promissory note |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net investment income |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Net Gains (Losses)
Net gains and losses are determined by specific identification. The net realized gains and losses are generated primarily from the following sources:
| • | Realized gains and losses from investments in Marketable securities and the Skyline Note |
| • | Changes in the fair value of investments in Marketable securities and the Skyline Note |
The following table presents the components of Net gains (losses):
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||
|
| 2026 |
| 2025 |
| 2026 |
| 2025 | ||||||||
Marketable securities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Net gains (losses) |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
5. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value guidance identifies three primary valuation techniques: the market approach, the income approach and the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset.
Fair Value Hierarchy
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to observable inputs such as quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The maximization of observable inputs and the minimization of the use of unobservable inputs are required.
16
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Classification within the fair value hierarchy is based upon the objectivity of the inputs that are significant to the valuation of an asset or liability as of the measurement date. The three levels within the fair value hierarchy are characterized as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 - Unobservable inputs for the asset or liability for which there is little, if any, market activity for the asset or liability at the measurement date. Unobservable inputs reflect the Company's own assumptions about what market participants would use to price the asset or liability. These inputs may include internally developed pricing models, discounted cash flow methodologies as well as instruments for which the fair value determination requires significant management judgment.
The following is a description of the valuation methodologies used for instruments carried at fair value. These methodologies are applied to assets and liabilities across the levels discussed above, and the observability of the inputs used determines the appropriate level in the fair value hierarchy for the respective asset or liability.
Valuation Methodologies of Financial Instruments Measured at Fair Value
Cash and cash equivalents and Restricted cash and cash equivalents - Money market instruments are measured at cost, which approximates fair values because of the relatively short time to maturity.
Equity securities - Whenever available, we obtained quoted prices in active markets for identical assets as of the balance sheet date to measure equity securities. Market price data is generally obtained from exchange or dealer markets.
Convertible promissory note - We estimate the fair value of the note using a market approach, based on the transaction price of the note and of identical notes issued by the same issuer on the same terms, plus accrued interest. At each measurement date, we assess whether events or changes in circumstances since those transactions, including the issuer’s financial condition and operating results, the terms of any subsequent financing, and changes in market conditions, indicate that the transaction price no longer approximates fair value. If we conclude that it does not, we may estimate fair value using other valuation techniques, such as discounted cash flow analyses or probability-weighted scenario analyses. Those techniques would use significant unobservable inputs, including the probability and expected timing of a qualified financing, acquisition or other liquidity event, the expected enterprise value at conversion, and a discount rate reflecting the time value of money and the risk characteristics of the investment.
17
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents information about assets measured at fair value on a recurring basis and indicates the level of the fair value measurement based on the observability of inputs used:
|
| September 30, 2026 | ||||||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||||||
Cash and cash equivalents (a) (b) |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total marketable securities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Convertible promissory note (c) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
| December 31, 2025 | ||||||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||||||
Cash and cash equivalents (a) (b) |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total marketable securities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Convertible promissory note (c) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
(a) | As of September 30, 2026 and December 31, 2025, included investments in money market mutual funds managed or advised by GAMCO Investors, Inc. |
(b) | Excludes cash held in banks, which totaled $ |
(c) | Because we elected the fair value option on the Skyline Note, accrued interest of $ |
There were liabilities subject to fair value on a recurring basis as of September 30, 2026 or December 31, 2025.
18
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Changes in Level 3 Recurring Fair Value Measurements
The following tables present changes during the three and nine months ended September 30, 2026 and 2025 in Level 3 assets and liabilities measured at fair value on a recurring basis, and the realized and unrealized gains (losses) related to the Level 3 assets in the Condensed Consolidated Balance Sheets as of September 30, 2026 and 2025:
|
| Three Months Ended September 30, 2026 | ||||||||||||||
|
| Fair Value Beginning of Period |
| Net Realized and Unrealized Gains (Losses) Included in Income |
| Purchases and Sales, Net |
| Fair Value End of Period | ||||||||
Assets: |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Convertible promissory note (a) |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
| Three Months Ended September 30, 2025 | ||||||||||||||
|
| Fair Value Beginning of Period |
| Net Realized and Unrealized Gains (Losses) Included in Income |
| Purchases and Sales, Net |
| Fair Value End of Period | ||||||||
Assets: |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Convertible promissory note (a) |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
| Nine Months Ended September 30, 2026 | ||||||||||||||
|
| Fair Value Beginning of Year |
| Net Realized and Unrealized Gains (Losses) Included in Income |
| Purchases and Sales, Net |
| Fair Value End of Period | ||||||||
Assets: |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Convertible promissory note (a) |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
| Nine Months Ended September 30, 2025 | ||||||||||||||
|
| Fair Value Beginning of Year |
| Net Realized and Unrealized Gains (Losses) Included in Income |
| Purchases and Sales, Net |
| Fair Value End of Period | ||||||||
Assets: |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Convertible promissory note (a) |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
(a) | For the three and nine months ended September 30, 2026, includes accrued interest of $ |
19
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
The following tables present the net realized and unrealized gains (losses) included in income related to the Level 3 assets and liabilities shown above, as reported in the Condensed Consolidated Statements of Operations:
|
| Three Months Ended September 30, 2026 | ||||||||||
|
| Net Investment Income |
| Net Gains (Losses) |
| Total | ||||||
Assets: |
|
|
| |
|
|
| |
|
|
| |
Convertible promissory note |
| $ |
|
| $ |
|
| $ |
| |||
Total |
| $ |
|
| $ |
|
| $ |
| |||
|
| Three Months Ended September 30, 2025 | ||||||||||
|
| Net Investment Income |
| Net Gains (Losses) |
| Total | ||||||
Assets: |
|
|
| |
|
|
| |
|
|
| |
Convertible promissory note |
| $ |
|
| $ |
|
| $ |
| |||
Total |
| $ |
|
| $ |
|
| $ |
| |||
|
| Nine Months Ended September 30, 2026 | ||||||||||
|
| Net Investment Income |
| Net Gains (Losses) |
| Total | ||||||
Assets: |
|
|
| |
|
|
| |
|
|
| |
Convertible promissory note |
| $ |
|
| $ |
|
| $ |
| |||
Total |
| $ |
|
| $ |
|
| $ |
| |||
|
| Nine Months Ended September 30, 2025 | ||||||||||
|
| Net Investment Income |
| Net Gains (Losses) |
| Total | ||||||
Assets: |
|
|
| |
|
|
| |
|
|
| |
Convertible promissory note |
| $ |
|
| $ |
|
| $ |
| |||
Total |
| $ |
|
| $ |
|
| $ |
| |||
20
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Quantitative Information about Level 3 Fair Value Measurements
As of September 30, 2026, the fair value of the convertible promissory note was determined to equal the transaction price of $
| • | approximately 30 days elapsed between the most recent issuance of a convertible note on identical terms ( August 31, 2026) and September 30, 2026, the measurement date; |
| • | during the period, Skyline issued additional convertible promissory notes at par on terms identical to the Skyline Note, on July 2, 2026 and August 31, 2026; |
| • | no financing activity occurred at Skyline on terms different from the Skyline Note; |
| • | no material developments in Skyline's technology, operations, or business prospects occurred during this period; and |
| • | no secondary market transactions in the Skyline Note or comparable instruments occurred during this period. |
21
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Fair Value Measurements on a Non-Recurring Basis
The Company has other assets that may be subject to measurement at fair value on a non-recurring basis including intangible assets and other long-lived assets. The Company reviews the carrying value of long-lived assets whenever events and circumstances indicate that the carrying amounts of the assets may not be recoverable. If it is determined that the assets are impaired, the carrying value would be reduced to an estimated recoverable value.
As of September 30, 2026 and December 31, 2025, the Company did write down any assets to fair value.
Fair Value Information about Financial Instruments Not Measured at Fair Value
As of September 30, 2026 and December 31, 2025, the Company did not have any assets or liabilities classified as financial instruments that were not measured at fair value.
6. Variable Interest Entities
The Company holds variable interests in certain entities in the form of equity investments. The Company consolidates an entity under the variable interest entity ("VIE") guidance when it is determined the Company is the primary beneficiary.
The Company has no right to the benefits from, nor does it bear the risk associated with, VIEs beyond the Company's direct equity investments in these entities. If the Company were to liquidate, the assets held by VIEs would not be available to the general creditors of the Company as a result of the liquidation.
During June 2023, the Company was appointed as sole managing member of LGL Systems Nevada Management Partners, LLC ("LGL Nevada") and invested approximately $
As described in Note 1, Lynch Capital holds a
22
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Consolidated VIEs
The Company's consolidated VIEs are LGL Systems and Skyline SPV.
The following table summarizes the assets and liabilities of the Company's consolidated VIEs included in the Condensed Consolidated Balance Sheets:
|
| September 30, 2026 |
| December 31, 2025 | ||||
Assets: |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Restricted cash and cash equivalents |
|
|
|
|
|
| ||
Accounts receivable |
|
|
|
|
|
| ||
Total current assets |
|
|
|
|
|
| ||
Convertible promissory note, at fair value |
|
|
|
|
|
| ||
Other assets |
|
|
|
|
|
| ||
Total assets |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Total liabilities |
| $ |
|
| $ |
| ||
The following table summarizes the non-controlling interests in the Company's consolidated VIEs:
|
| September 30, 2026 |
| December 31, 2025 | ||||
LGL Systems Acquisition Holding Company, LLC |
| $ |
|
| $ |
| ||
Skyline Instruments May 2026, a Series of CGF2021 LLC |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
The following table presents the revenue, net income (loss) attributable to non-controlling interests, and net income (loss) attributable to LGL Group associated with our variable interests in consolidated VIEs, as classified in the Condensed Consolidated Statements of Operations:
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||
|
| 2026 |
| 2025 |
| 2026 |
| 2025 | ||||||||
Total revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Net income attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income attributable to LGL Group |
|
|
|
|
|
|
|
|
|
|
|
| ||||
23
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Unconsolidated VIEs
The Company's unconsolidated VIEs are LGL Nevada and Skyline.
We calculate our maximum exposure to loss to be (i) the amount invested in the debt or equity of the VIE and (ii) other commitments and guarantees to the VIE.
|
| September 30, 2026 |
| December 31, 2025 | ||||
Total assets |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Maximum exposure to loss: |
|
|
|
|
|
|
|
|
On-balance sheet (a) (b) |
|
|
|
|
|
| ||
Off-balance sheet |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
(a) | As of September 30, 2026 and December 31, 2025, our investment in LGL Nevada was recorded in Other assets in the Condensed Consolidated Balance Sheets. |
(b) | As of September 30, 2026, the Company's exposure to Skyline was reflected through Skyline SPV, a consolidated VIE, and recorded in Convertible promissory note, at fair value and Other assets (Accrued interest receivable) on the Condensed Consolidated Balance Sheets. |
LGL Systems Nevada Management Partners LLC
LGL Nevada was formed in October 2019 for the purpose of performing key management and controls decisions of LGL Systems. The remaining
Skyline Instruments Corporation
Through its investment in Skyline SPV, the Company holds a variable interest in Skyline in the form of the Skyline Note and related contractual rights. The Company determined that Skyline is a VIE under FASB ASC Topic 810, Consolidation ("ASC 810") because Skyline lacks sufficient equity at risk to finance its activities without additional subordinated financial support. Skyline SPV’s board designation, participation and approval rights are protective or participating rights that do not convey power over Skyline’s most significant activities, so the Company is not Skyline’s primary beneficiary.
The Company's maximum exposure to loss related to Skyline is the carrying amount of the Skyline Note and related accrued interest reflected on the Condensed Consolidated Balance Sheets. As of September 30, 2026, Skyline's total assets were $
24
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
7. Related Party Transactions
In the normal course of business, the Company enters into various transactions with affiliated companies. Parties are considered to be related if one party has the ability to control or exercise significant influence over the other party in making financial or operating decisions.
The following tables summarize income and expenses from transactions with related parties for the three and nine months ended September 30, 2026 and 2025:
|
| Three Months Ended September 30, | ||||||||||||||
|
| 2026 |
| 2025 | ||||||||||||
|
| Income |
| Expense |
| Income |
| Expense | ||||||||
GAMCO Investors, Inc. |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
M-tron Industries, Inc. |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Alpha G Investment Management, Inc. |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
| Nine Months Ended September 30, | ||||||||||||||
|
| 2026 |
| 2025 | ||||||||||||
|
| Income |
| Expense |
| Income |
| Expense | ||||||||
GAMCO Investors, Inc. |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
M-tron Industries, Inc. |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Alpha G Investment Management, Inc. |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The following table summarizes assets and liabilities with related parties as of September 30, 2026 and December 31, 2025:
|
| September 30, 2026 |
| December 31, 2025 | ||||||||||||
|
| Assets |
| Liabilities |
| Assets |
| Liabilities | ||||||||
GAMCO Investors, Inc. |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
M-tron Industries, Inc. |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Alpha G Investment Management, Inc. |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
25
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
The material agreements whereby the Company generates revenues and expenses with affiliated entities are discussed below:
Investment Activity with GAMCO Investors, Inc.
Certain balances held and invested in various mutual funds are managed or advised by GAMCO Investors, Inc. or one of its subsidiaries (collectively, "GAMCO" or the "Fund Manager"), which is related to the Company through certain of our shareholders. All investments, including those in related party money market mutual funds, are overseen by the independent Audit Committee of the Board of Directors (the "Audit Committee"). The Audit Committee meets regularly to review the alternatives and has determined the current investments most reflect the Company's objective of lower cost, market return and adherence to having a larger proportion of underlying investments directly in United States Treasuries. For the three and nine months ended September 30, 2026 and 2025, the Company paid the Fund Manager a fund management fee of approximately
As of September 30, 2026, the balance managed by the Fund Manager totaled $
For the three months ended September 30, 2026, the Company earned income on its investments managed by the Fund Manager totaling $
For the nine months ended September 30, 2026, the Company earned income on its investments managed by the Fund Manager totaling $
Transactions with M-tron Industries, Inc.
Transitional Administrative and Management Services Agreement
On October 7, 2022, the separation of the M-tron Industries, Inc. ("MtronPTI") business from the Company was completed (the "Separation") and the business became an independent, publicly traded company trading on the NYSE American under the stock symbol "MPTI." The Separation was completed through the Company's distribution (the "Distribution") of
LGL Group and MtronPTI entered into an Amended and Restated Transitional Administrative and Management Services Agreement ("MtronPTI TSA"), which sets out the terms for services to be provided between the two companies post-separation. The current terms result in a net payment of $
For the three months ended September 30, 2026 and 2025, the Company paid MtronPTI $
26
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Tax Indemnity and Sharing Agreement
LGL Group and MtronPTI entered into a Tax Indemnity and Sharing Agreement ("MtronPTI Tax Agreement"), which sets out the terms for which party would be responsible for taxes imposed on the Company if the distribution, together with certain related transactions, were to fail to qualify as a tax-free transaction under Internal Revenue Code ("IRC") Sections 355 and 368(a)(1)(D) if such failure were the result of actions taken after the Distribution by the Company or MtronPTI.
For the three and nine months ended September 30, 2026 and 2025, taxes related to the Distribution have been recorded in the Condensed Consolidated Financial Statements.
Other Transactions
LGL Group and MtronPTI have agreed to share salaries and benefits related to certain employees incurred by LGL Group and/or MtronPTI. For the three and nine months ended September 30, 2026, the Company reimbursed MtronPTI $
Transactions with Alpha G Investment Management, Inc.
Alpha G Investment Management, Inc. ("Alpha G") is related to the Company through certain of our stockholders. LGL Group and Alpha G agreed to share salaries and benefits related to certain employees incurred by Alpha G. For the three and nine months ended September 30, 2026, the Company recognized $
Skyline Instruments Corporation
As described in Note 1 - Overview and Basis of Presentation, Lynch Capital serves as investment advisor to Skyline SPV under the Skyline IAA, with authority over all decisions regarding its assets, including the management, conversion and disposition of the Skyline Note. Under the Side Letter, the Company’s Chief Executive Officer serves on Skyline’s board of directors as Skyline SPV’s designee, with the same rights as other directors and no unilateral voting or veto rights.
27
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
8. Income Taxes
The Company’s quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the period presented. To determine the annual effective tax rate, the Company estimates both the total income (loss) before income taxes for the full year and the jurisdictions in which that income (loss) is subject to tax. The actual effective tax rate for the full year may differ from these estimates if income (loss) before income taxes is greater than or less than what was estimated or if the allocation of income (loss) to jurisdictions in which it is taxed is different from the estimated allocations.
The Company's effective tax rates for the three and nine months ended September 30, 2026 were
9. Stock-Based Compensation
Under the Company’s Amended and Restated 2021 Incentive Plan (the "Plan"), approved by the Company's stockholders at the 2026 Annual Meeting of Stockholders held on May 12, 2026, stock-based compensation may be issued to employees and non-employee directors. As of September 30, 2026,
The following table summarizes stock-based compensation expense, which includes expenses related to awards granted under the Plan for the periods indicated:
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||
|
| 2026 |
| 2025 |
| 2026 |
| 2025 | ||||||||
Restricted stock awards |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Stock options |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Restricted Stock Awards
The following table summarizes restricted stock awards activity for the period indicated:
|
| Number of Shares |
| Weighted Average Grant Date Fair Value |
| Aggregate Grant Date Fair Value | ||||||
Balance as of December 31, 2025 |
|
|
|
| $ |
|
| $ |
| |||
Granted |
|
|
|
|
|
|
|
|
| |||
Vested |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Balance as of September 30, 2026 |
|
|
|
| $ |
|
| $ |
| |||
As of September 30, 2026, there was $
28
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Stock Options
The Company estimates the fair value of stock options on the grant date using the Black-Scholes-Merton option-pricing model. The Black-Scholes-Merton option-pricing model requires subjective assumptions, including future stock price volatility and expected time to exercise. Option awards are generally granted with an exercise price equal to the market price of the Company's stock on the grant date.
The following table presents the weighted-average assumptions for stock options granted:
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||
|
| 2026 |
| 2025 |
| 2026 |
| 2025 | ||||||||
Expected volatility (a) |
|
|
|
|
|
|
|
| % |
|
|
| ||||
Expected annual dividend yield (b) |
|
|
|
|
|
|
|
| % |
|
|
| ||||
Risk-free interest rate (c) |
|
|
|
|
|
|
|
| % |
|
|
| ||||
Expected term, in years (d) |
|
| — |
|
|
| — |
|
|
|
|
|
| — |
| |
(a) | The expected volatility is based on the implied volatility of the Company's historical stock price data over the expected term. |
(b) | The yield is 0% as the Company is not expected to pay a dividend. |
(c) | The risk-free rate is based on the average U.S. Treasury zero-coupon rate over the four days prior to the grant date. We selected the risk-free rate that is commensurate with the length of the expected term as of the grant date, using interpolation where necessary. |
(d) | The expected term is the simple average of the vesting periods and the contractual term. |
The following table provides a rollforward of stock option activity for the nine months ended September 30, 2026:
|
| Number of Options Outstanding |
| Weighted Average Exercise Price |
| Weighted Average Grant Date Fair Value |
| Weighted Average Remaining Term (in years) |
| Aggregate Intrinsic Value | ||||||||||
Outstanding as of December 31, 2025 |
|
|
|
| $ |
|
| $ |
|
|
| — |
|
| $ | — |
| |||
Granted |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| | |||
Outstanding as of September 30, 2026 |
|
|
|
| $ |
|
| $ |
|
|
|
|
| $ |
| |||||
Exercisable as of September 30, 2026 |
|
|
|
| $ |
|
| $ |
|
|
|
|
| $ |
| |||||
29
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
10. Stockholders' Equity
Shares Outstanding
The following table presents a rollforward of outstanding shares for the periods indicated:
|
| Nine Months Ended September 30, 2026 |
| Year Ended December 31, 2025 | ||||||||||||||||||||
|
| Common Stock Issued |
| Held in Treasury |
| Common Stock Outstanding |
| Common Stock Issued |
| Held in Treasury |
| Common Stock Outstanding | ||||||||||||
Shares, beginning of year |
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||
Stock-based compensation |
|
|
|
|
| — |
|
|
|
|
|
|
|
|
| — |
|
|
|
| ||||
Shares withheld for employee taxes |
|
| ( | ) |
|
| — |
|
|
| ( | ) |
|
|
|
|
| — |
|
|
|
| ||
Shares issued from settlement of warrants |
|
|
|
|
| — |
|
|
|
|
|
|
|
|
| — |
|
|
|
| ||||
Shares issued for settlement of subscription rights |
|
|
|
|
| — |
|
|
|
|
|
|
|
|
| — |
|
|
|
| ||||
Repurchases of common stock |
|
| — |
|
|
|
|
|
|
|
|
| — |
|
|
| ( | ) |
|
| ( | ) | ||
Shares, end of period |
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||
Warrants to Purchase Common Stock
On November 16, 2020, the Company issued
Pursuant to the warrant agreement, the Distribution was a qualifying dilutive event that required an adjustment to the exercise price and the trigger price for potential acceleration of the exercise date. Effective October 18, 2022, the warrant exercise price was adjusted to $
On March 4, 2025, the average VWAP of LGL Group Common Stock exceeded the Adjusted Trigger Price for 30 consecutive trading days, which resulted in the Warrants becoming immediately exercisable.
On November 6, 2025, the Company's Board of Directors (the "Board") approved an extension to the expiration date from November 16, 2025, a Sunday, which allowed holders to exercise their Warrants by the close of business on November 17, 2025, to December 9, 2025. The Company subsequently extended the expiration date to December 31, 2025.
As of December 31, 2025, Warrant holders exercised
30
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
Subscription Rights Offering
On June 5, 2026, the Company issued
As of July 24, 2026, the Company completed the Rights Offering. Rightsholders exercised
The subscription price of the Rights was less than the fair value of the Company’s common stock immediately prior to the exercise of the Rights. See Note 11 - Earnings Per Share for the effect of the resulting bonus element on weighted average shares outstanding and earnings per share.
Share Repurchase Program
In August 2011, the Board authorized an expansion of its previously announced share repurchase program (the "Repurchase Program"), pursuant to which the Company may repurchase up to an additional
31
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
11. Earnings Per Share ("EPS")
The following table presents a reconciliation of Net income (loss) and shares used in calculating basic and diluted net income (loss) per common share for the periods indicated:
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||
(in thousands, except share and per share data) |
| 2026 |
| 2025 |
| 2026 |
| 2025 | ||||||||
Numerator for EPS: |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Net income (loss) |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||
Less: Net income attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net (loss) income attributable to LGL Group common stockholders |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| ||
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Denominator for EPS: |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Weighted average common shares outstanding - basic |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Adjustment for bonus element - Rights Offering (a) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Adjusted weighted average shares outstanding - basic |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Dilutive effects (b): |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Warrants |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Restricted stock |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common shares outstanding - diluted (a) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
(Loss) income per common share attributable to LGL Group common stockholders: |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Basic |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Diluted |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| ||
(a) | Weighted average shares outstanding for the three and nine months ended September 30, 2026 and 2025 have been retroactively adjusted for the bonus element of the Rights Offering. Refer to "Rights Offering Bonus Element" below. |
(b) | For the three and nine months ended September 30, 2026, weighted average shares used for calculating earnings per share excludes subscription rights to purchase |
Rights Offering Bonus Element
The subscription price of $
32
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
12. Contingencies
In the normal course of business, the Company and its subsidiaries may become defendants in certain product liability, patent infringement, worker claims and other litigation. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. The Company is not involved in any legal proceedings other than routine litigation arising in the normal course of business, none of which the Company believes will have a material adverse effect on the Company's business, financial condition or results of operations.
13. Other Financial Statement Information
Inventories, Net
Inventories are valued at the lower of cost or net realizable value using the first-in, first-out ("FIFO") method. The Company reduces the value of its inventories to net realizable value when the net realizable value is believed to be less than the cost of the item.
The components of inventory as of September 30, 2026 and December 31, 2025 are summarized below:
|
| September 30, 2026 |
| December 31, 2025 | ||||
Raw materials |
| $ |
|
| $ |
| ||
Work in process |
|
|
|
|
|
| ||
Finished goods |
|
|
|
|
|
| ||
Total gross inventory |
|
|
|
|
|
| ||
Reserve for excess and obsolete inventory |
|
| ( | ) |
|
| ( | ) |
Inventories, net |
| $ |
|
| $ |
| ||
Intangible Assets, Net
The components of intangible assets as of September 30, 2026 and December 31, 2025 are summarized below:
|
| September 30, 2026 |
| December 31, 2025 | ||||
Intellectual property |
| $ |
|
| $ |
| ||
Gross intangible assets |
|
|
|
|
|
| ||
Less: Accumulated amortization |
|
| ( | ) |
|
| ( | ) |
Intangible assets, net |
| $ |
|
| $ |
| ||
33
Table of Contents
The LGL Group, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in thousands, unless otherwise stated)
14. Domestic and Foreign Revenues
Significant foreign revenues from operations (10% or more of foreign sales) were as follows:
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||
|
| 2026 |
| 2025 |
| 2026 |
| 2025 | ||||||||
Australia |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Germany |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Spain |
|
|
|
|
|
|
|
|
|
|
|
| ||||
France |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Norway |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Italy |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Netherlands |
|
|
|
|
|
|
|
|
|
|
|
| ||||
United Kingdom |
|
|
|
|
|
|
|
|
|
|
|
| ||||
All other foreign countries |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total foreign revenues |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total domestic revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The Company allocates its foreign revenue based on the customer's ship-to location.
15. Subsequent Events
The Company has evaluated events and transactions that occurred after the balance sheet date through the date that the Condensed Consolidated Financial Statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the Condensed Consolidated Financial Statements.
34
Table of Contents
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the accompanying unaudited Condensed Consolidated Financial Statements, the notes thereto and the other unaudited financial data included in this Quarterly Report on Form 10-Q. The following discussion should also be read in conjunction with the audited consolidated financial statements and the notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on March 30, 2026. The terms "LGL," "LGL Group," "we," "our," "us," or the "Company" refer to The LGL Group, Inc. and its consolidated subsidiaries and unless otherwise defined herein, capitalized terms used herein shall have the same meanings as set forth in our condensed consolidated financial statements and the notes thereto.
In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Actual results may differ materially from those discussed in the forward-looking statements as a result of various factors. See the Cautionary Statement Concerning Forward-Looking Statements included in this Quarterly Report on Form 10-Q.
Unless otherwise stated, all dollar amounts are in thousands.
Overview
The LGL Group, Inc. is a holding company that acquires, owns, and builds businesses and makes strategic investments, with an emphasis on critical technologies. We operate through two complementary business activities: Platform Operations and Merchant Investment. Through Platform Operations, we build operating businesses through organic growth, operational improvement, and complementary acquisitions, currently conducted through our Electronic Instruments reportable segment and anchored by our subsidiary Precise Time and Frequency, LLC ("PTF"). Through Merchant Investment, we deploy capital through minority investments, co-investments, and strategic partnerships to broaden our opportunity set and support future platform development. We seek to create long-term stockholder value through disciplined capital allocation and active ownership.
The accompanying unaudited condensed consolidated financial statements include the accounts of The LGL Group, Inc., its majority-owned subsidiaries, and variable interest entities ("VIE") of which we are the primary beneficiary.
We report our results of operations through two reportable segments: Electronic Instruments and Merchant Investment. Activities not related to our business segments, such as our corporate operations and corporate-level assets and financial obligations, are included in Corporate.
During 2026, we have strengthened our capital resources, expanded the order backlog at PTF and invested in the people and capabilities needed to support our operating and investment activities. Our priorities include converting customer orders into shipments, continuing to develop a defense technology platform called ZuluTime LLC ("ZuluTime"), expanding our acquisition pipeline and reducing reliance on historical shared services arrangements.
Platform Operations
Our Platform Operations activities are currently conducted through our Electronic Instruments segment, anchored by our subsidiary PTF, a globally positioned producer of industrial Electronic Instruments and commercial products and services. Founded in 2002, PTF operates from our design and manufacturing facility in Wakefield, Massachusetts. Through PTF, we design, manufacture, and market high-performance Frequency and Time Reference Standards that form the basis for timing and synchronization in various applications. Our primary markets are communications, networking, aerospace, defense, instrumentation, and industrial markets.
Merchant Investment
Our Merchant Investment activities are conducted through our subsidiary Lynch Capital International, LLC ("Lynch Capital") and comprise various investment vehicles through which we deploy capital, including minority investments, co-investments, strategic partnerships, and certain special purpose vehicles that may be syndicated for investment and that involve certain fee-generating activities. We seek to invest available cash and cash equivalents with a view to enhancing returns while broadening our opportunity set and supporting future platform development.
35
Table of Contents
As of September 30, 2026, LGL Group had investments (classified within Cash and cash equivalents and Marketable securities) with a fair value of approximately $86.6 million, of which $26.3 million was held within the Merchant Investment business. The Company accounts for its Marketable securities under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 321, Investments - Equity Securities ("ASC 321") and as such, its Marketable securities are reported at fair value on its Condensed Consolidated Balance Sheets.
Our investment associated with Skyline Instruments Corporation ("Skyline") is held through Skyline Instruments May 2026, a Series of CGF2021 LLC ("Skyline SPV"), a consolidated investment vehicle that owns a convertible promissory note issued by Skyline (the "Skyline Note"). Through Lynch Capital, we invested $850 in Skyline SPV and held a 33.9% interest as of September 30, 2026. This investment provides exposure to technologies complementary to our precision timing strategy and may create opportunities for commercial or strategic collaboration. We consolidate Skyline SPV, but we do not consolidate Skyline’s operating business.
Recent Developments
PTF Customer Awards
During the third quarter of 2026, we announced customer awards supporting military communications and space-based communications infrastructure. On July 2, 2026, we announced a HaveQuick military timing contract supporting a partner nation in the Indo-Pacific region, with deliveries extending over 24 months. On August 5, 2026, we announced $6.0 million in satellite communications awards from an existing major customer. Those awards included $3.4 million already reflected in backlog at June 30, 2026. Award values and backlog do not represent revenue recognized in the period of announcement; revenue depends on delivery schedules and satisfaction of the applicable contractual performance obligations.
Rights Offering
In July 2026, we completed our transferable subscription rights offering, issuing 6,062,714 shares of common stock and receiving approximately $41.8 million in gross proceeds and $41.5 million in net proceeds. The shares were issued on July 23, 2026, and completion was announced on July 24, 2026. The offering materially increased our capital resources and shares outstanding and provides additional resources for the growth of our businesses, potential acquisitions and strategic investments.
Operating Independence and MtronPTI Services
During 2026, we have been working to reduce our reliance on M-tron Industries, Inc. (“MtronPTI”) for administrative support and on the transitional services arrangements established following the 2022 separation. We are developing the internal capabilities and third-party support needed to manage these functions within LGL Group and support the continued development of our operating businesses. We are targeting the fourth quarter of 2026 for transition of the remaining services, subject to completion of the necessary operational and contractual steps.
The transition is intended to improve operational independence, accountability and our ability to support future growth. During implementation, we may incur overlapping service costs and expenses to establish replacement capabilities. The net effect on recurring corporate expenses will depend on the scope and cost of the functions transferred and the arrangements ultimately implemented.
For the three and nine months ended September 30, 2026, net fees under the transitional administrative and management services agreement were $12 and $36, respectively. Separate reimbursements for employee services were $28 and $84 for those periods, respectively. Our tax-sharing arrangements are separate from the services transition.
36
Table of Contents
Acquisition Pipeline and Strategic Relationships
During the third quarter, we expanded our sourcing and evaluation of potential acquisitions for ZuluTime that could broaden the platform’s technical capabilities, customer relationships and addressable markets. Our evaluation emphasizes strategic fit, the quality and durability of earnings and cash flows, customer and program concentration, management capabilities, integration requirements and valuation. We intend to maintain discipline in the pace and terms of capital deployment, and there can be no assurance that evaluated opportunities will result in definitive agreements or completed transactions.
The timing and financial effects of any acquisition will depend on the opportunities available, satisfactory due diligence, negotiated terms, required approvals and the resources needed to operate and integrate the acquired businesses. Our current operating results do not include the operating results of businesses that have not been acquired.
Our strategic relationships, including our previously announced relationship with Legion Capital Partners, LLC, support the sourcing and evaluation of opportunities across defense and other critical technologies. Any investment or other transaction involving LGL Group would be evaluated on its strategic and financial merits and would be subject to applicable approvals and related-party review procedures.
Nevada Redomestication
Effective September 1, 2026, the Company completed its redomestication from Delaware to Nevada following stockholder approval on May 12, 2026. Each outstanding share of common stock continued as one share of the Nevada corporation. The redomestication did not change our business, operations, management, assets, liabilities or workforce, other than costs associated with the conversion, and our common stock continues to trade on NYSE American under the symbol "LGL."
Trends and Uncertainties
We are not aware of any material trends or uncertainties that may reasonably be expected to have a material impact, favorable or unfavorable, on our revenues or income, other than global macroeconomic conditions affecting our industry generally, those described below, and those described in Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 30, 2026 and in Part II, Item 1A of this Quarterly Report.
Demand and Capacity for Precision Timing and Frequency Products
We believe several long-term trends in the defense and aerospace markets are increasing the strategic importance of precision timing and frequency technologies. Modern defense systems increasingly depend on accurate and resilient timing for communications, radar, electronic warfare, autonomous systems, distributed sensing and secure networks. The increasing complexity of distributed and networked defense architectures, together with greater awareness of the vulnerability of GPS- and GNSS-dependent systems in contested environments, is driving demand for more resilient positioning, navigation and timing ("PNT") capabilities, including high-performance timing references and synchronization products capable of maintaining accuracy and reliability in GPS-denied, degraded or disrupted environments. Continued investment in defense modernization, space-based systems, autonomous platforms and advanced communications may create additional opportunities for suppliers of precision timing technologies.
Consistent with these trends, we have experienced increasing demand for our frequency and timing products, reflected in growth in customer orders and order backlog over recent periods. We seek to position our precision timing business and related investments to benefit from this demand through continued product development, investment in security and resiliency capabilities, and selective investments and acquisitions. The extent to which this demand converts into shipments and revenue is uncertain, however, and depends on factors including customer procurement decisions, government spending priorities, program and production schedules, the availability and lead times of key components and raw materials, and our available manufacturing capacity.
A higher and more concentrated volume of orders may require us to expand or accelerate production capacity, add personnel, and increase purchases of materials and components in advance of shipment. These actions could increase our working capital requirements and affect the timing of our operating cash flows, as expenditures to fulfill orders may precede the related customer collections. We continue to monitor demand against our capacity and liquidity, but we cannot provide assurances as to the timing or extent to which this demand will result in revenue, or as to its impact on our operating results, cash flows or working capital in any given period.
37
Table of Contents
Changing Interest Rates
The U.S. Federal Reserve decreased the federal funds rate a total of three times throughout 2025, resulting in a range from 3.50% to 3.75% as of December 31, 2025. The U.S. Federal Reserve maintained the federal funds rate within that range until September 16, 2026, when it increased the target range by 25 basis points to 3.75% to 4.00%. Through the date of filing of this Quarterly Report on Form 10-Q, the U.S. Federal Reserve has maintained the federal funds rate in the range of 3.75% to 4.00%. If interest rates continue to increase, the returns generated by our investments in U.S. Treasury money market funds could be favorably impacted.
Tariffs
The current U.S. federal administration has imposed tariffs on certain products and materials entering the United States imported from other countries. Additionally, foreign governments have imposed retaliatory tariffs on products and materials exported from the United States. Following the U.S. Supreme Court’s February 2026 decision striking down certain tariffs, the Trump Administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business. The effect on our results will depend on the products and jurisdictions affected, the timing of implementation and our ability to manage costs and delivery requirements.
38
Table of Contents
Results of Operations - Consolidated
Three months ended September 30, 2026 compared to three months ended September 30, 2025
The following table presents our Condensed Consolidated Statements of Operations for the periods indicated:
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|
||||||
(in thousands) |
|
2026 |
|
2025 |
|
$ Change |
|
% Change |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ | 720 |
|
|
$ | 661 |
|
|
$ | 59 |
|
|
|
8.9 | % |
Net investment income |
|
|
744 |
|
|
|
442 |
|
|
|
302 |
|
|
|
68.3 | % |
Net gains |
|
|
— |
|
|
|
5 |
|
|
|
(5 | ) |
|
|
n/m |
|
Total revenues |
|
|
1,464 |
|
|
|
1,108 |
|
|
|
356 |
|
|
|
32.1 | % |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing cost of sales |
|
|
491 |
|
|
|
312 |
|
|
|
179 |
|
|
|
57.4 | % |
Engineering, selling and administrative |
|
|
948 |
|
|
|
676 |
|
|
|
272 |
|
|
|
40.2 | % |
Total expenses |
|
|
1,439 |
|
|
|
988 |
|
|
|
451 |
|
|
|
45.6 | % |
Income before income taxes |
|
|
25 |
|
|
|
120 |
|
|
|
(95 | ) |
|
|
(79.2 | %) |
Income tax expense (benefit) |
|
|
25 |
|
|
|
(674 | ) |
|
|
699 |
|
|
|
n/m |
|
Net income |
|
|
— |
|
|
|
794 |
|
|
|
(794 | ) |
|
|
n/m |
|
Less: Net income attributable to non-controlling interests |
|
|
45 |
|
|
|
22 |
|
|
|
23 |
|
|
|
104.5 | % |
Net (loss) income attributable to LGL Group common stockholders |
|
$ | (45 | ) |
|
$ | 772 |
|
|
$ | (817 | ) |
|
|
n/m |
|
Total Revenues
Total revenues increased $356, or 32.1%, from $1,108 for the three months ended September 30, 2025 to $1,464 for the three months ended September 30, 2026. The increase was primarily due to the following:
|
• |
a $59, or 8.9%, increase in Net sales from $661 for the three months ended September 30, 2025 to $720 for the three months ended September 30, 2026 driven by higher product shipments as orders in backlog as of June 30, 2026 converted to revenue; and |
|
• |
a $302, or 68.3%, increase in Net investment income from $442 for the three months ended September 30, 2025 to $744 for the three months ended September 30, 2026 driven by higher balances invested in United States Treasury money market funds and accrued interest earned on the Skyline Note. |
Total Expenses
Total expenses increased $451, or 45.6%, from $988 for the three months ended September 30, 2025 to $1,439 for the three months ended September 30, 2026. The increase was primarily due to the following:
|
• |
a $179, or 57.4%, increase in Manufacturing cost of sales from $312 for the three months ended September 30, 2025 to $491 for the three months ended September 30, 2026 driven by the growth in revenues and changes in product and pricing mix; and |
|
• |
a $272, or 40.2%, increase in Engineering, selling and administrative from $676 for the three months ended September 30, 2025 to $948 for the three months ended September 30, 2026 driven by a $134 increase in salaries and wages, $91 increase in stock-based compensation due to grants made to key employees in January and May 2026, and a $71 increase in professional service fees. |
Gross Margin
Gross margin (Net sales less Manufacturing cost of sales as a percentage of Net sales) decreased 2,100 basis points from 52.8% for the three months ended September 30, 2025 to 31.8% for the three months ended September 30, 2026 reflecting changes in product and pricing mix associated volume-based pricing extended to a single customer in connection with increased order volume as well as higher inventory reserves associated with increased inventory levels.
39
Table of Contents
Income Tax Expense
Income tax expense (benefit) increased $699, or 103.7%, from a benefit of ($674) for the three months ended September 30, 2025 to an expense of $25 for the three months ended September 30, 2026, primarily due to the non-recurrence of a 2025 benefit from the reversal of a previously recorded uncertain tax position for a matter that was no longer subject to examination by the relevant taxing authority.
Net Income Attributable to Non-Controlling Interests
Net income attributable to non-controlling interests increased $23, or 104.5%, from $22 for the three months ended September 30, 2025 to $45 for the three months ended September 30, 2026 primarily due to accrued interest income related to the Skyline Note.
Nine months ended September 30, 2026 compared to nine months ended September 30, 2025
The following table presents our Condensed Consolidated Statements of Operations for the periods indicated:
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|
||||||
(in thousands) |
|
2026 |
|
2025 |
|
$ Change |
|
% Change |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ | 2,152 |
|
|
$ | 1,650 |
|
|
$ | 502 |
|
|
|
30.4 | % |
Net investment income |
|
|
1,545 |
|
|
|
1,287 |
|
|
|
258 |
|
|
|
20.0 | % |
Net gains |
|
|
5 |
|
|
|
13 |
|
|
|
(8 | ) |
|
|
(61.5 | %) |
Total revenues |
|
|
3,702 |
|
|
|
2,950 |
|
|
|
752 |
|
|
|
25.5 | % |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing cost of sales |
|
|
1,206 |
|
|
|
760 |
|
|
|
446 |
|
|
|
58.7 | % |
Engineering, selling and administrative |
|
|
3,703 |
|
|
|
2,060 |
|
|
|
1,643 |
|
|
|
79.8 | % |
Total expenses |
|
|
4,909 |
|
|
|
2,820 |
|
|
|
2,089 |
|
|
|
74.1 | % |
(Loss) income before income taxes |
|
|
(1,207 | ) |
|
|
130 |
|
|
|
(1,337 | ) |
|
|
n/m |
|
Income tax benefit |
|
|
(250 | ) |
|
|
(632 | ) |
|
|
382 |
|
|
|
60.4 | % |
Net (loss) income |
|
|
(957 | ) |
|
|
762 |
|
|
|
(1,719 | ) |
|
|
n/m |
|
Less: Net income attributable to non-controlling interests |
|
|
63 |
|
|
|
47 |
|
|
|
16 |
|
|
|
34.0 | % |
Net (loss) income attributable to LGL Group common stockholders |
|
$ | (1,020 | ) |
|
$ | 715 |
|
|
$ | (1,735 | ) |
|
|
n/m |
|
Total Revenues
Total revenues increased $752, or 25.5%, from $2,950 for the nine months ended September 30, 2025 to $3,702 for the nine months ended September 30, 2026. The increase was primarily due to the following:
|
• |
a $502, or 30.4%, increase in Net sales from $1,650 for the nine months ended September 30, 2025 to $2,152 for the nine months ended September 30, 2026 primarily due to higher product shipments; and |
|
• |
a $258, or 20.0%, increase in Net investment income from $1,287 for the nine months ended September 30, 2025 to $1,545 for the nine months ended September 30, 2026 driven by higher balances invested in United States Treasury money market funds and accrued interest earned on the Skyline Note. |
Total Expenses
Total expenses increased $2,089, or 74.1%, from $2,820 for the nine months ended September 30, 2025 to $4,909 for the nine months ended September 30, 2026. The increase was primarily due to the following:
|
• |
a $446, or 58.7%, increase in Manufacturing cost of sales from $760 for the nine months ended September 30, 2025 to $1,206 for the nine months ended September 30, 2026 driven by the growth in revenues and changes in product and pricing mix; and |
|
• |
a $1,643, or 79.8%, increase in Engineering, selling and administrative from $2,060 for the nine months ended September 30, 2025 to $3,703 for the nine months ended September 30, 2026 driven by an $874 increase in stock-based compensation due to grants made to key employees in January and May 2026, a $451 increase in professional service fees, a $140 increase in salaries, wages, and benefits, and a $178 increase in other corporate expenses. |
40
Table of Contents
Gross Margin
Gross margin (Net sales less Manufacturing cost of sales as a percentage of Net sales) decreased 1,000 basis points from 53.9% for the nine months ended September 30, 2025 to 44.0% for the nine months ended September 30, 2026 reflecting changes in product and pricing mix associated volume-based pricing extended to a single customer in connection with increased order volume as well as higher inventory reserves associated with increased inventory levels.
Income Tax Benefit
Income tax benefit decreased $382, or 60.4%, from $632 for the nine months ended September 30, 2025 to $250 for the nine months ended September 30, 2026 primarily due to the tax effect of loss before income taxes in 2026 compared to the reversal of a previously recorded uncertain tax position for a matter that was no longer subject to examination by the relevant taxing authority in 2025.
Net Income Attributable to Non-Controlling Interests
Net income attributable to non-controlling interests increased $16, or 34.0%, from $47 for the nine months ended September 30, 2025 to $63 for the nine months ended September 30, 2026 primarily due to accrued interest income related to the Skyline Note.
Backlog
As of September 30, 2026, our order backlog was $6,463, an increase of $5,838, or 934.1%, from $625 as of December 31, 2025 and an increase of $5,687, or 732.9%, from $776 as of September 30, 2025. Backlog consists of amounts under signed contracts that have not yet been fulfilled. Backlog is adjusted quarterly to reflect cancellations, deferrals, and revisions to scope and cost, if any.
41
Table of Contents
Results of Operations - Operating Segments and Corporate
Electronic Instruments
Three months ended September 30, 2026 compared to three months ended September 30, 2025
The following table presents income before income taxes of our Electronic Instruments segment for the periods indicated:
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|
||||||
(in thousands) |
|
2026 |
|
2025 |
|
$ Change |
|
% Change |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ | 720 |
|
|
$ | 661 |
|
|
$ | 59 |
|
|
|
8.9 | % |
Total revenues |
|
|
720 |
|
|
|
661 |
|
|
|
59 |
|
|
|
8.9 | % |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing cost of sales |
|
|
491 |
|
|
|
312 |
|
|
|
179 |
|
|
|
57.4 | % |
Engineering, selling and administrative |
|
|
293 |
|
|
|
245 |
|
|
|
48 |
|
|
|
19.6 | % |
Total expenses |
|
|
784 |
|
|
|
557 |
|
|
|
227 |
|
|
|
40.8 | % |
(Loss) income before income taxes |
|
$ | (64 | ) |
|
$ | 104 |
|
|
$ | (168 | ) |
|
|
n/m |
|
(Loss) Income Before Income Taxes
(Loss) income before income taxes decreased $168 from income of $104 for the three months ended September 30, 2025 to a loss of ($64) for the three months ended September 30, 2026. The decrease was primarily due to:
• |
a $179, or 57.4%, increase in Manufacturing cost of sales driven by the growth in revenues and changes in product and pricing mix; and |
• |
a $48, or 19.6%, increase in Engineering, selling and administrative driven by higher engineering-related costs due to changes in headcount and higher professional services fees. |
The decrease was partially offset by a $59, or 8.9%, increase in Net sales driven by higher product shipments.
Nine months ended September 30, 2026 compared to nine months ended September 30, 2025
The following table presents income before income taxes of our Electronic Instruments segment for the periods indicated:
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|
||||||
(in thousands) |
|
2026 |
|
2025 |
|
$ Change |
|
% Change |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ | 2,152 |
|
|
$ | 1,650 |
|
|
$ | 502 |
|
|
|
30.4 | % |
Total revenues |
|
|
2,152 |
|
|
|
1,650 |
|
|
|
502 |
|
|
|
30.4 | % |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing cost of sales |
|
|
1,206 |
|
|
|
760 |
|
|
|
446 |
|
|
|
58.7 | % |
Engineering, selling and administrative |
|
|
965 |
|
|
|
699 |
|
|
|
266 |
|
|
|
38.1 | % |
Total expenses |
|
|
2,171 |
|
|
|
1,459 |
|
|
|
712 |
|
|
|
48.8 | % |
(Loss) income before income taxes |
|
$ | (19 | ) |
|
$ | 191 |
|
|
$ | (210 | ) |
|
|
n/m |
|
(Loss) Income Before Income Taxes
(Loss) income before income taxes decreased $210 from income of $191 for the nine months ended September 30, 2025 to a loss of ($19) for the nine months ended September 30, 2026. The decrease was primarily due to:
|
• |
a $446, or 58.7%, increase in Manufacturing cost of sales driven by the growth in revenues and changes in product and pricing mix; and |
|
• |
a $266, or 38.1%, increase in Engineering, selling and administrative driven by higher engineering-related costs due to changes in headcount and higher professional services fees. |
The decrease was partially offset by a $502, or 30.4%, increase in Net sales driven by higher product shipments.
42
Table of Contents
Merchant Investment
Three months ended September 30, 2026 compared to three months ended September 30, 2025
The following table presents income before income taxes of our Merchant Investment segment for the periods indicated:
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|
||||||
(in thousands) |
|
2026 |
|
2025 |
|
$ Change |
|
% Change |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
$ | 291 |
|
|
$ | 274 |
|
|
$ | 17 |
|
|
|
6.2 | % |
Total revenues |
|
|
291 |
|
|
|
274 |
|
|
|
17 |
|
|
|
6.2 | % |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, selling and administrative |
|
|
169 |
|
|
|
145 |
|
|
|
24 |
|
|
|
16.6 | % |
Total expenses |
|
|
169 |
|
|
|
145 |
|
|
|
24 |
|
|
|
16.6 | % |
Income before income taxes |
|
$ | 122 |
|
|
$ | 129 |
|
|
$ | (7 | ) |
|
|
(5.4 | %) |
Income Before Income Taxes
Income before income taxes decreased $7, or 5.4%, from $129 for the three months ended September 30, 2025 to $122 for the three months ended September 30, 2026. The decrease was primarily due to a $24, or 16.6%, increase in Engineering, selling and administrative driven by higher corporate-level expenses allocated to the Merchant Investment segment.
The decrease was partially offset by a $17, or 6.2%, increase in Net investment income. The increase was driven by accrued interest earned on the Skyline Note partially offset by lower yields on investments in United States Treasury money market funds.
Nine months ended September 30, 2026 compared to nine months ended September 30, 2025
The following table presents income before income taxes of our Merchant Investment segment for the periods indicated:
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|
||||||
(in thousands) |
|
2026 |
|
2025 |
|
$ Change |
|
% Change |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
$ | 753 |
|
|
$ | 783 |
|
|
$ | (30 | ) |
|
|
(3.8 | %) |
Total revenues |
|
|
753 |
|
|
|
783 |
|
|
|
(30 | ) |
|
|
(3.8 | %) |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, selling and administrative |
|
|
496 |
|
|
|
353 |
|
|
|
143 |
|
|
|
40.5 | % |
Total expenses |
|
|
496 |
|
|
|
353 |
|
|
|
143 |
|
|
|
40.5 | % |
Income before income taxes |
|
$ | 257 |
|
|
$ | 430 |
|
|
$ | (173 | ) |
|
|
(40.2 | %) |
Income Before Income Taxes
Income before income taxes decreased $173, or 40.2%, from $430 for the nine months ended September 30, 2025 to $257 for the nine months ended September 30, 2026. The decrease was primarily due to:
|
• |
a $30, or 3.8%, decrease in Net investment income related to lower yields on investments in United States Treasury money market funds partially offset by accrued interest earned on the Skyline Note; and |
|
• |
a $143, or 40.5%, increase in Engineering, selling and administrative driven by higher corporate-level expenses allocated to the Merchant Investment segment and formation costs related to Skyline SPV. |
43
Table of Contents
Corporate
Three months ended September 30, 2026 compared to three months ended September 30, 2025
The following table presents income before income taxes of Corporate for the periods indicated:
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|
||||||
(in thousands) |
|
2026 |
|
2025 |
|
$ Change |
|
% Change |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
$ | 453 |
|
|
$ | 168 |
|
|
$ | 285 |
|
|
|
169.6 | % |
Net gains |
|
|
— |
|
|
|
5 |
|
|
|
(5 | ) |
|
|
n/m |
|
Total revenues |
|
|
453 |
|
|
|
173 |
|
|
|
280 |
|
|
|
161.8 | % |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, selling and administrative |
|
|
486 |
|
|
|
286 |
|
|
|
200 |
|
|
|
69.9 | % |
Total expenses |
|
|
486 |
|
|
|
286 |
|
|
|
200 |
|
|
|
69.9 | % |
Loss before income taxes |
|
$ | (33 | ) |
|
$ | (113 | ) |
|
$ | 80 |
|
|
|
70.8 | % |
Loss Before Income Taxes
Loss before income taxes decreased $80, or 70.8%, from $113 for the three months ended September 30, 2025 to $33 for the three months ended September 30, 2026. The decrease was primarily due to a $285, or 169.6%, increase in Net investment income driven by higher balances invested in United States Treasury money market funds partially offset by a $200, or 69.9%, increase in Engineering, selling and administrative related to higher stock-based compensation, higher salaries and wages and related benefits, and higher professional services fees.
Nine months ended September 30, 2026 compared to nine months ended September 30, 2025
The following table presents income before income taxes of Corporate for the periods indicated:
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|
||||||
(in thousands) |
|
2026 |
|
2025 |
|
$ Change |
|
% Change |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
$ | 792 |
|
|
$ | 504 |
|
|
$ | 288 |
|
|
|
57.1 | % |
Net gains |
|
|
5 |
|
|
|
13 |
|
|
|
(8 | ) |
|
|
(61.5 | %) |
Total revenues |
|
|
797 |
|
|
|
517 |
|
|
|
280 |
|
|
|
54.2 | % |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, selling and administrative |
|
|
2,242 |
|
|
|
1,008 |
|
|
|
1,234 |
|
|
|
122.4 | % |
Total expenses |
|
|
2,242 |
|
|
|
1,008 |
|
|
|
1,234 |
|
|
|
122.4 | % |
Loss before income taxes |
|
$ | (1,445 | ) |
|
$ | (491 | ) |
|
$ | (954 | ) |
|
|
(194.3 | %) |
Loss Before Income Taxes
Loss before income taxes increased $954, or 194.3%, from $491 for the nine months ended September 30, 2025 to $1,445 for the nine months ended September 30, 2026. The increase was primarily due to a $1,234, or 122.4%, increase in Engineering, selling and administrative driven by higher stock-based compensation, higher salaries and wages and related benefits, and higher professional services fees partially offset by a $288, or 57.1%, increase in Net investment income driven by higher balances invested in United States Treasury money market funds.
44
Table of Contents
Liquidity and Capital Resources
Overview
Liquidity refers to our ability to access sufficient sources of cash to meet the requirements of our operating, investing and financing activities.
Capital refers to our long-term financial resources available to support business operations and future growth.
Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of the businesses, timing of cash flows, general economic conditions and access to the capital markets and the other sources of liquidity and capital described herein.
As of September 30, 2026 and December 31, 2025, Cash and cash equivalents were $86,930 and $41,514, respectively.
On July 24, 2026, the Company completed the Rights Offering. Rightsholders exercised 3,419,215, or 52.1%, of the Rights, in a net share settlement of 3,419,215 shares of Common Stock. The remaining 3,131,220 Rights expired unexercised in accordance with their terms. The Company distributed 2,643,499 shares of the 3,131,220 unallocated shares of Common Stock to Rightsholders who elected to participate in the over-subscription privilege. The gross proceeds to the Company were $41.8 million.
Cash Flow Activity
The following table presents the cash flow activity for the periods indicated:
|
|
As of September 30, |
||||||
(in thousands) |
|
2026 |
|
2025 |
||||
Cash, cash equivalents, and restricted cash, beginning of period |
|
$ | 41,514 |
|
|
$ | 41,585 |
|
Cash provided by operating activities |
|
|
107 |
|
|
|
425 |
|
Cash used in investing activities |
|
|
(2,481 | ) |
|
|
— |
|
Cash provided by (used in) financing activities |
|
|
47,810 |
|
|
|
(439 | ) |
Net change in cash and cash equivalents |
|
|
45,436 |
|
|
|
(14 | ) |
Cash, cash equivalents, and restricted cash, end of period |
|
$ | 86,950 |
|
|
$ | 41,571 |
|
Operating Activities
Cash provided by operating activities was $107 for the nine months ended September 30, 2026 compared to $425 for the nine months ended September 30, 2025, a decrease of $318, primarily due to the following:
|
• |
Higher net loss; |
|
• |
Higher non-cash adjustments, including; |
|
◦ |
Stock-based compensation increased $915 from $44 for the nine months ended September 30, 2025 to $959 for the nine months ended September 30, 2026; |
|
• |
Working capital movements, including: |
|
◦ |
Accounts receivable, which decreased $14 for the nine months ended September 30, 2026 compared to a decrease of $33 for the nine months ended September 30, 2025, due to the timing of collection of receivables; |
|
◦ |
Inventories, net, which increased $695 for the nine months ended September 30, 2026 compared to an increase of $1 for the nine months ended September 30, 2025, due to purchases of materials to meet increased demand; |
|
◦ |
Contract liabilities, which increased $792 for the nine months ended September 30, 2026 compared to an increase of $43 for the nine months ended September 30, 2025, due to advance payments received from customers prior to the shipment of the related products, which will be recognized as Net sales as the related performance obligations are satisfied; and |
|
◦ |
Accounts payable, accrued compensation and commissions, other accrued expenses and liabilities, and other liabilities, which increased $252 for the nine months ended September 30, 2026 compared to an increase of $134 for the nine months ended September 30, 2025, due to higher expenses incurred and the timing of payments. |
Our working capital metrics and ratios were as follows:
(in thousands) |
|
September 30, 2026 |
|
December 31, 2025 |
||||
Current assets |
|
$ | 88,741 |
|
|
$ | 46,324 |
|
Less: Current liabilities |
|
|
1,955 |
|
|
|
915 |
|
Working capital |
|
$ | 86,786 |
|
|
$ | 45,409 |
|
|
|
|
|
|
|
|
|
|
Current ratio |
|
|
45.4 |
|
|
|
50.6 |
|
45
Table of Contents
Management continues to focus on efficiently managing working capital requirements to match operating activity levels and will seek to deploy the Company’s working capital where it will generate the greatest returns.
Investing Activities
Cash used in investing activities was $2,481 for the nine months ended September 30, 2026 compared to $0 for the nine months ended September 30, 2025, an increase of $2,481 primarily due to the investment in the Skyline Note in June and July 2026.
Financing Activities
Cash provided by financing activities was $47,810 for the nine months ended September 30, 2026 compared to cash used in financing activities of $439 for the nine months ended September 30, 2025, an increase of $48,249, primarily due to $41.5 million in net proceeds from the exercise of subscription rights, $4.6 million in net proceeds from the settlement of the warrants in January 2026, and $1.7 million in capital contributions from non-controlling interest in Skyline SPV in June and July 2026.
Capital Resources
We believe that existing cash and cash equivalents, marketable securities and cash generated from operations will provide sufficient liquidity to meet our ongoing working capital and capital expenditure requirements for the next 12 months from the date of this filing and for the foreseeable future.
Our Board has adhered to a practice of not paying cash dividends. This policy takes into account our long-term growth objectives, including our anticipated investments for organic growth, potential acquisitions and stockholders' desire for capital appreciation of their holdings. No cash dividends have been paid to the Company's stockholders since January 30, 1989, and none are expected to be paid for the foreseeable future.
Contractual Obligations
As of September 30, 2026, there have been no material changes in our contractual obligations from December 31, 2025, a description of which may be found in Part II, Item 7. Management Discussion and Analysis - Liquidity and Capital Resources - Contractual Obligations in the 2025 Annual Report.
Critical Accounting Estimates
Our accompanying Condensed Consolidated Financial Statements are prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying footnotes. These estimates are made and evaluated on an on-going basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions. For a discussion of the Company’s critical accounting estimates, other than those described below, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2025.
Fair Value of the Skyline Note
Through our consolidated variable interest entity, Skyline SPV, we hold the Skyline Note, for which we have elected the fair value option under FASB ASC Topic 825, Financial Instruments ("ASC 825"). Because the Skyline Note is an obligation of an early-stage, privately held company for which there is no active market and no observable market prices, its fair value is measured using unobservable inputs and is classified within Level 3 of the fair value hierarchy.
We determined the fair value of the Skyline Note as of September 30, 2026 based on its transaction price plus accrued interest. We concluded that the transaction price represented fair value at issuance and continues to approximate fair value, supported by Skyline’s issuance during the quarter of additional notes on identical terms to third parties at the same price, most recently on August 31, 2026.
46
Table of Contents
At each subsequent measurement date, we assess whether events or changes in circumstances indicate that the transaction price no longer approximates fair value, including Skyline’s financial condition and operating results, its progress against development milestones, the terms of any subsequent financing transactions, and changes in market conditions. As time passes after these transactions, they become less representative of current value. Determining whether such events have occurred, and whether they would result in a change in fair value, requires significant management judgment given the limited financial and market information available for an early-stage company.
If we determine in a future period that the transaction price no longer represents fair value, for example because Skyline completes a financing at a price implying a lower value for the Skyline Note or because its financial condition or ability to fund operations until a qualifying financing deteriorates, we would estimate fair value using other unobservable inputs and valuation techniques, which could result in a materially different measurement. We continue to evaluate the valuation technique we will apply to the Skyline Note in future periods.
Because we consolidate Skyline SPV, the full carrying amount of the Skyline Note is reflected in our Condensed Consolidated Financial Statements, and our maximum exposure to loss with respect to Skyline is the carrying amount of the Skyline Note and the related accrued interest. As a result, changes in this estimate could have a material effect on our reported financial position and results of operations.
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
Not applicable.
Item 4. |
Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of September 30, 2026 was conducted under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures, as of September 30, 2026, were effective.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
47
Table of Contents
PART II
OTHER INFORMATION
Item 1. |
Legal Proceedings |
In the ordinary course of business, we may become subject to litigation or claims. We are not aware of any material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we or our subsidiaries are a party or to which our properties are subject.
Item 1A. |
Risk Factors |
For a discussion of the Company's potential risks and uncertainties, refer to Part I, Item 1A. Risk Factors in the 2025 Annual Report and Trends and Uncertainties in Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2. of this Quarterly Report on Form 10-Q.
Other than the trends and uncertainties described under Trends and Uncertainties above, the risk factors described in Part II, Item 1A. of this Quarterly Report, and general economic conditions affecting our industry, we are not aware of any additional material trends or uncertainties that may reasonably be expected to have a material impact, favorable or unfavorable, on our revenues or income beyond those described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2025.
Risks Related to the Skyline Transaction
Our investment in an early-stage company through a consolidated special purpose vehicle is subject to significant risk, and we could lose some or all of the amounts we have invested or committed.
Through our wholly owned subsidiary, Lynch Capital International, LLC, we invested $850 in Skyline Instruments May 2026, a Series of CGF2021 LLC (the "Skyline SPV"), a pooled investment vehicle that holds a note receivable from Skyline Instruments Corporation ("Skyline"), an early-stage company developing precision timing and GPS-denied sensing technologies. Early-stage companies such as Skyline have limited operating histories, are not yet profitable, and depend on the continued development and commercialization of unproven technologies and on their ability to secure defense and commercial contracts. Skyline may never generate meaningful revenue or achieve profitability, may require additional capital that is not available on acceptable terms, and may fail. Because we consolidate Skyline SPV as a variable interest entity, the full carrying amount of Skyline SPV's investment is reflected on our Condensed Consolidated Balance Sheets, and our maximum exposure to loss is the the carrying amount of the Skyline Note and related accrued interest. If Skyline's business does not develop as anticipated, we could lose some or all of this amount, which could adversely affect our results of operations and financial condition.
Our Skyline investment is illiquid and difficult to value, and its carrying value may not be realized.
There is no public market for the securities of Skyline or for interests in Skyline SPV, and we may be unable to dispose of our interest or recover our investment when we wish to do so, or at all. The value of an early-stage privately held company is inherently uncertain and is based on significant judgment and assumptions about future performance, financing, and market conditions. Subsequent events, including down-round financings, changes in Skyline's prospects, or an inability to secure anticipated contracts, could require us to recognize impairment or other losses, which could be material.
48
Table of Contents
Risks Related to Our Securities
We have broad discretion over the use of the net proceeds from the rights offering, and we may not use them effectively.
We intend to use the net proceeds from the rights offering to advance a broader defense technology and resilient infrastructure strategy, including opportunities related to precision timing and frequency and adjacent critical technologies. Our management has broad discretion in the application of these proceeds and could apply them in ways that do not improve our results of operations or enhance the value of our common stock. Pending their use, the proceeds may be invested in ways that do not yield a favorable return.
Our officers, directors and 10% or greater stockholders have significant voting power and may vote their shares in a manner that is not in the best interest of other stockholders.
Our officers, directors and 10% or greater stockholders control approximately 60.6% of the voting power represented by our outstanding shares of common stock as of September 30, 2026, compared to approximately 36.7% as of March 16, 2026. This increase resulted primarily from participation by Marc Gabelli, our Executive Chairman, and/or other affiliated holders in the Company's rights offering, which expired on July 15, 2026 and was completed on July 24, 2026.
If these stockholders act together, they may be able to exert significant control over our management and affairs requiring stockholder approval, including approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our common stock. This concentration of ownership may not be in the best interests of all of our stockholders.
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
None.
Item 3. |
Defaults upon Senior Securities |
Not applicable.
Item 4. |
Mine Safety Disclosures |
Not applicable.
Item 5. | Other Information |
During the three months ended September 30, 2026, of our directors or officers, as defined in Section 16 of the Exchange Act, adopted or terminated a "Rule - trading arrangement" or a "non-Rule -1 trading arrangement," as each term is defined in Item 408 of Regulation S-K of the Exchange Act.
49
Table of Contents
Item 6. |
Exhibits |
The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2026 (and are numbered in accordance with Item 601 of Regulation S-K):
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit No. |
|
Description |
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Filed Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. |
|
Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession.
|
|
|
|
|
|
|
|
|
|
|
2.1 |
|
Plan of Conversion of The LGL Group, Inc. |
|
8-K |
|
001-00106
|
|
2.1 |
|
September 1, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
|
Articles of Incorporation and Bylaws.
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
Articles of Incorporation of The LGL Group, Inc. |
|
8-K
|
|
001-00106
|
|
3.1
|
|
September 1, 2026
|
|
|
3.2 |
|
Bylaws of The LGL Group, Inc. |
|
8-K
|
|
001-00106
|
|
3.2
|
|
September 1, 2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1 |
|
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
|
|
|
X
|
31.2 |
|
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1 |
|
Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
|
|
|
|
|
|
|
|
|
X
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32.2 |
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Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
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X
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101.INS
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
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X
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101.SCH
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Inline XBRL Taxonomy Extension Schema Document
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X
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101.CAL
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Inline XBRL Taxonomy Extension Calculation Linkbase Document
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X
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101.DEF
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Inline XBRL Taxonomy Extension Definition Linkbase Document
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X
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101.LAB
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Inline XBRL Taxonomy Extension Label Linkbase Document
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X
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101.PRE
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Inline XBRL Taxonomy Extension Presentation Linkbase Document
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X
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104
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The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101
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X
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* |
In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. |
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Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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THE LGL GROUP, INC. (Registrant) |
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November 12, 2026 |
By: | /s/ Jason D. Lamb |
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Jason D. Lamb |
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Chief Executive Officer (Principal Executive Officer) |
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November 12, 2026 |
By: | /s/ Patrick Huvane |
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Patrick Huvane |
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Executive Vice President - Business Development (Principal Financial Officer) |
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