Quarterly Report for Quarter Ending September 30, 2024 (Form 10-Q)

lglg20240930_10q.htm

The LGL Group, Inc.

Form 10-Q for the Period Ended September 30, 2024

Table of Contents

						Page
PART I.		FINANCIAL INFORMATION
Item 1.		Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets		2
		Condensed Consolidated Statements of Operations		3
		Condensed Consolidated Statements of Stockholders' Equity		4
		Condensed Consolidated Statements of Cash Flows		6
		Notes to the Condensed Consolidated Financial Statements
			1.	Basis of Presentation		7
			2.	Summary of Significant Accounting Policies		7
			3.	Segment Information		8
			4.	Investments		11
			5.	Fair Value Measurements		12
			6.	Variable Interest Entities		13
			7.	Related Party Transactions		14
			8.	Income Taxes		15
			9.	Stock-Based Compensation		15
			10.	Stockholders' Equity		16
			11.	Earnings Per Share		16
			12.	Contingencies		17
			13.	Other Financial Statement Information		17
			14.	Domestic and Foreign Revenues		17
			15.	Subsequent Events		17
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		25
Item 4.		Controls and Procedures		25
PART II.		OTHER INFORMATION
Item 1.		Legal Proceedings		26
Item 1A.		Risk Factors		26
Item 5.		Other Information		26
Item 6.		Exhibits		26
		Signatures		28

Cautionary Statement Concerning Forward-Looking Statements

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements

The LGL Group, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

See accompanying Notes to the Condensed Consolidated Financial Statements.

The LGL Group, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(a)	Basic and diluted earnings per share are calculated using actual, unrounded amounts. Therefore, the components of earnings per share may not sum to its corresponding total.

See accompanying Notes to the Condensed Consolidated Financial Statements.

The LGL Group, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

See accompanying Notes to the Condensed Consolidated Financial Statements.

The LGL Group, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

See accompanying Notes to the Condensed Consolidated Financial Statements.

The LGL Group, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

See accompanying Notes to the Condensed Consolidated Financial Statements.

1. Basis of Presentation

The LGL Group, Inc. is a holding company engaged in services, merchant investment, and manufacturing business activities. The Company was incorporated in 1928 under the laws of the State of Indiana and reincorporated under the laws of the State of Delaware in 2007. 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 manufacturing business is operated through 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.

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, 2023 (the "2023 Annual Report") filed with the Securities and Exchange Commission (the "SEC") on April 1, 2024. The consolidated financial information as of December 31, 2023 included herein has been derived from the audited Consolidated Financial Statements in the 2023 Annual Report

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, 2024 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024.

2. Summary of Significant Accounting Policies

During the three and nine months ended September 30, 2024, there were no material changes to our significant accounting policies included in the 2023 Annual Report. For additional information, refer to Note 2 to the audited Consolidated Financial Statements in the 2023 Annual Report.

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.

Impairment of Long-Lived Assets

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

We performed an assessment to determine if there were any indicators of impairment as a result of the operating conditions resulting as of the periods ended September 30, 2024 and December 31, 2023. We concluded that, while there were events and circumstances in the macro-environment that did impact us, we did not experience any entity-specific indicators of asset impairment and no triggering events occurred.

Future Application of Accounting Standards

Segment Reporting

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, "Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures" ("ASU 2023-07"), to address improvements to reportable segment disclosures. The standard primarily requires the following disclosure on an annual and interim basis: (i) significant segment expenses that are regularly provided to chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss; and (ii) other segment items and description of its composition. The standard also requires current annual disclosures about a reportable segment's profits or losses and assets to be disclosed in interim periods and the title and position of the CODM with an explanation of how the CODM uses the report measure(s) of segment profits or losses in assessing segment performance. The provisions of the standard are effective for public companies for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The standard is applied retrospectively to all prior periods presented. We are assessing the impact of this standard.

Income Taxes

In December 2023, the FASB issued 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. We are assessing the impact of this standard.

3. Segment Information

The Company has identified tworeportable business segments: Electronic Instruments and Merchant Investment. These segments are consistent with the manner in which the chief operating decision maker reviews the business to assess performance and allocate resources. 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 International, LLC ("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.

The Electronic Instruments and Merchant Investment segments are allocated overhead expenses based on each segment's assets as a percentage of total assets.

The following tables presents LGL Group's operations by segment:

		Three Months Ended September 30, 2024
		Electronic Instruments		Merchant Investment		Corporate		Consolidated
Revenues:
Net sales		$	650			$	-			$	-			$	650
Net investment income			-				318				213				531
Net (losses) gains			-				-				(2	)			(2	)
Total revenues			650				318				211				1,179
Expenses:
Manufacturing cost of sales			368				-				-				368
Engineering, selling and administrative			238				90				345				673
Total expenses			606				90				345				1,041
Income (loss) from continuing operations before income taxes			44				228				(134	)			138
Income tax expense			-				-				48				48
Net income (loss) from continuing operations			44				228				(182	)			90
Income (loss) from discontinued operations, net of tax			-				-				-				-
Net income (loss)			44				228				(182	)			90
Less: Net income attributable to non-controlling interests			-				18				-				18
Net income (loss) attributable to LGL Group common stockholders		$	44			$	210			$	(182	)		$	72

		Three Months Ended September 30, 2023
		Electronic Instruments		Merchant Investment		Corporate		Consolidated
Revenues:
Net sales		$	438			$	-			$	-			$	438
Net investment income			-				287				257				544
Net (losses) gains			-				-				(4	)			(4	)
Total revenues			438				287				253				978
Expenses:
Manufacturing cost of sales			195				-				-				195
Engineering, selling and administrative			173				64				347				584
Total expenses			368				64				347				779
Income (loss) from continuing operations before income taxes			70				223				(94	)			199
Income tax expense (benefit)			-				-				69				69
Net income (loss) from continuing operations			70				223				(163	)			130
Income (loss) from discontinued operations, net of tax			-				-				-				-
Net income (loss)			70				223				(163	)			130
Less: Net income attributable to non-controlling interests			-				22				-				22
Net income (loss) attributable to LGL Group common stockholders		$	70			$	201			$	(163	)		$	108

		Nine Months Ended September 30, 2024
		Electronic Instruments		Merchant Investment		Corporate		Consolidated
Revenues:
Net sales		$	1,573			$	-			$	-			$	1,573
Net investment income			-				922				646				1,568
Net (losses) gains			-				-				(6	)			(6	)
Total revenues			1,573				922				640				3,135
Expenses:
Manufacturing cost of sales			786				-				-				786
Engineering, selling and administrative			667				217				1,011				1,895
Total expenses			1,453				217				1,011				2,681
Income (loss) from continuing operations before income taxes			120				705				(371	)			454
Income tax expense			-				-				160				160
Net income (loss) from continuing operations			120				705				(531	)			294
Income (loss) from discontinued operations, net of tax			-				-				-				-
Net income (loss)			120				705				(531	)			294
Less: Net income attributable to non-controlling interests			-				64				-				64
Net income (loss) attributable to LGL Group common stockholders		$	120			$	641			$	(531	)		$	230

		Nine Months Ended September 30, 2023
		Electronic Instruments		Merchant Investment		Corporate		Consolidated
Revenues:
Net sales		$	1,282			$	-			$	-			$	1,282
Net investment income			-				542				475				1,017
Net (losses) gains			-				-				384				384
Total revenues			1,282				542				859				2,683
Expenses:
Manufacturing cost of sales			595				-				-				595
Engineering, selling and administrative			523				152				1,096				1,771
Total expenses			1,118				152				1,096				2,366
Income (loss) from continuing operations before income taxes			164				390				(237	)			317
Income tax expense			-				-				132				132
Net income (loss) from continuing operations			164				390				(369	)			185
Income (loss) from discontinued operations, net of tax			-				-				(28	)			(28	)
Net income (loss)			164				390				(397	)			157
Less: Net income attributable to non-controlling interests			-				22				-				22
Net income (loss) attributable to LGL Group common stockholders		$	164			$	368			$	(397	)		$	135

The following table presents LGL Group's identifiable assets by segment:

		September 30, 2024		December 31, 2023
Electronic Instruments		$	839			$	843
Merchant Investment			24,439				23,530
Corporate			17,207				17,477
Total		$	42,485			$	41,850

The Company did nothave any capital expenditures as of September 30, 2024 or December 31, 2023.

4. Investments

Marketable Securities

Details of marketable securities held as of September 30, 2024 or December 31, 2023 are as follows:

		September 30, 2024
										Cumulative
										Unrealized
		Fair Value		Basis		(Loss) Gain
Equity securities		$	16			$	34			$	(18	)
Total		$	16			$	34			$	(18	)

		December 31, 2023
										Cumulative
										Unrealized
		Fair Value		Basis		(Loss) Gain
Equity securities		$	22			$	34			$	(12	)
Total		$	22			$	34			$	(12	)

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)

•

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,
		2024		2023		2024		2023
Interest on cash and cash equivalents		$	531			$	544			$	1,568			$	1,017
Net investment income		$	531			$	544			$	1,568			$	1,017

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

•

Changes in the fair value of investments in Marketable securities

The following table presents the components of Net gains (losses):

		Three Months Ended September 30,		Nine Months Ended September 30,
		2024		2023		2024		2023
Marketable securities		$	(2	)		$	(4	)		$	(6	)		$	384
Net (losses) gains		$	(2	)		$	(4	)		$	(6	)		$	384

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.

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 asset 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 - 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.

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, 2024
		Level 1		Level 2		Level 3		Total
Cash and cash equivalents (a)		$	41,144			$	-			$	-			$	41,144
Marketable securities:
Equity securities			16				-				-				16
Total marketable securities			16				-				-				16
Total		$	41,160			$	-			$	-			$	41,160

		December 31, 2023
		Level 1		Level 2		Level 3		Total
Cash and cash equivalents (a)		$	40,229			$	-			$	-			$	40,229
Marketable securities:
Equity securities			22				-				-				22
Total marketable securities			22				-				-				22
Total		$	40,251			$	-			$	-			$	40,251

(a)	As of September 30, 2024 and December 31, 2023, included investments in money market mutual funds managed or advised by GAMCO Investors, Inc.

There were no liabilities subject to fair value on a recurring basis as of September 30, 2024 or December 31, 2023.

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 goodwill and intangible assets and other long-lived assets. The Company reviews goodwill annually and 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. The Company's common stock warrants (as defined below) were measured at fair value as disclosed in Note 11 - Stockholders' Equity to the Consolidated Financial Statements in the 2023 Annual Report.

As of September 30, 2024 and December 31, 2023, the Company did notwrite down any assets to fair value.

Fair Value Information about Financial Instruments Not Measured at Fair Value

As of September 30, 2024 and December 31, 2023, the Company did 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 $4 into LGL Nevada, representing the Company's 1.0% general partnership interest. Concurrently, Lynch Capital, a wholly owned subsidiary of the Company, invested $1,000 into LGL Systems Acquisition Holding Company, LLC ("LGL Systems"), representing 34.8% of the memberships in LGL Systems, which is controlled by LGL Nevada. As a result, the Company determined it was the primary beneficiary of LGL Systems and was therefore required to consolidate LGL Systems.

Consolidated VIEs

The Company's only consolidated VIE is LGL Systems.

The following table summarizes the assets and liabilities of LGL Systems included in the Condensed Consolidated Balance Sheets:

		September 30, 2024		December 31, 2023
Assets:
Current assets:
Cash and cash equivalents		$	3,030			$	2,932
Accounts receivable			14				14
Total current assets			3,044				2,946
Total assets		$	3,044			$	2,946
Total liabilities		$	-			$	-

As of September 30, 2024 and December 31, 2023, the non-controlling interests in LGL Systems was $1,984 and $1,920, respectively.

Unconsolidated VIEs

The Company's only unconsolidated VIE is LGL Nevada.

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, 2024		December 31, 2023
Total assets		$	599			$	588
Maximum exposure to loss:
On-balance sheet (a)			4				3
Off-balance sheet			-				-
Total		$	4			$	3

(a)	As of September 30, 2024 and December 31, 2023, our investment in LGL Nevada was recorded in Other assets in 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 99.0% of ownership interests are held by four individuals, two of which are members of Company management. In the event LGL Nevada resigns as manager of LGL Systems, it has the sole right to appoint a new manager.

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 of 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, 2024 and 2023:

		Three Months Ended September 30,
		2024		2023
		Income		Expense		Income		Expense
GAMCO Investors, Inc.		$	444			$	-			$	350			$	-
M-tron Industries, Inc.			-				(15	)			-				12
Total		$	444			$	(15	)		$	350			$	12

		Nine Months Ended September 30,
		2024		2023
		Income		Expense		Income		Expense
GAMCO Investors, Inc.		$	1,293			$	-			$	1,172			$	-
M-tron Industries, Inc.			-				(44	)			-				8
Total		$	1,293			$	(44	)		$	1,172			$	8

The following table summarizes assets and liabilities with related parties as of September 30, 2024 and December 31, 2023:

		September 30, 2024		December 31, 2023
		Assets		Liabilities		Assets		Liabilities
GAMCO Investors, Inc.		$	33,931			$	-			$	32,568			$	-
M-tron Industries, Inc.			-				34				-				-
Total		$	33,931			$	34			$	32,568			$	-

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 mutual funds, are overseen by the independent Investment Committee of the Board of Directors (the "Investment Committee"). The Investment 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 months ended September 30, 2024 and 2023, the Company paid the Fund Manager a fund management fee of approximately 8 basis points per annum of the asset balances under management. For the nine months ended September 30, 2024 and 2023, the Company paid the Fund Manager a fund management fee of approximately 8 basis points and 16 basis points per annum, respectively, of the asset balances under management. All fund management fees are not paid directly by the Company and are deducted prior to a fund striking its net asset value ("NAV").

As of September 30, 2024, the balance managed by the Fund Manager totaled $33,931, all of which was classified within Cash and cash equivalents on the Condensed Consolidated Balance Sheets. As of December 31, 2023, the balance managed by the Fund Manager totaled $32,568, all of which was classified within Cash and cash equivalents on the Condensed Consolidated Balance Sheets.

For the three months ended September 30, 2024, the Company earned income on its investments managed by the Fund Manager totaling $444, all of which was included in Net investment income on the Condensed Consolidated Statements of Operations. For the three months ended September 30, 2023, the Company earned income on its investments managed by the Fund Manager totaling $350, all of which was included in Net investment income on the Condensed Consolidated Statements of Operations.

For the nine months ended September 30, 2024, the Company earned income on its investments managed by the Fund Manager totaling $1,293, all of which was included in Net investment income on the Condensed Consolidated Statements of Operations. For the nine months ended September 30, 2023, the Company earned income on its investments managed by the Fund Manager totaling $1,172, of which $802 was included in Net investment income and $370 was included in Net (losses) gains on the Condensed Consolidated Statements of Operations.

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 100% of the shares of MtronPTI's common stock to holders of the Company's common stock as of the close of business on September 30, 2022, the record date for the Distribution.

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 monthly payment of $4 per month to MtronPTI.

For the three months ended September 30, 2024 and 2023, the Company paid MtronPTI $12 under the terms of the MtronPTI TSA, which were recorded in Engineering, selling and administrative on the Condensed Consolidated Statements of Operations. For the nine months ended September 30, 2024 and 2023, the Company paid MtronPTI $36, respectively, under the terms of the MtronPTI TSA, which were recorded in Engineering, selling and administrative on the Condensed Consolidated Statements of Operations.

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, 2024 and 2023, no 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 the Company. For the three and nine months ended September 30, 2024, MtronPTI reimbursed the Company $27 and $80, respectively, of the salaries and benefits of certain employees, which represents 50% of those costs and were recorded as a reduction to Engineering, selling and administrative on the Condensed Consolidated Statements of Operations.

LGL Group and MtronPTI agreed to share any excess Separation costs. Included in discontinued operations is $28, which represents 50% of the excess Separation costs incurred for nine months ended September 30, 2023.

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 on continuing operations for the three and nine months ended September 30, 2024 were 34.8% and 35.2%, respectively. The Company's effective tax rates on continuing operations for the three and nine months ended September 30, 2023 were 34.7% and 41.6%, respectively. The effective tax rates differed from the statutory tax rate of 21% primarily due to the impact of uncertain tax positions and state income taxes.

9. Stock-Based Compensation

Under the Company's 2021 Incentive Plan (the "Plan"), and the prior 2011 Incentive Plan, as amended, stock-based compensation may be issued to employees and non-employee directors. As of September 30, 2024, 955,070 shares remained available for future issuance under the Plan.

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,
		2024		2023		2024		2023
Restricted stock awards		$	9			$	-			$	27			$	-
Total		$	9			$	-			$	27			$	-

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, 2023			20,118			$	5.22			$	105
Granted			-				-				-
Vested			-				-				-
Canceled			-				-				-
Balance as of September 30, 2024			20,118			$	5.22			$	105

10. Stockholders' Equity

Shares Outstanding

The following table presents a rollforward of outstanding shares for the periods indicated:

		Nine Months Ended September 30, 2024		Year Ended December 31, 2023
		Common Stock Issued		Held in Treasury		Common Stock Outstanding		Common Stock Issued		Held in Treasury		Common Stock Outstanding
Shares, beginning of year			5,454,639				(81,584	)			5,373,055				5,434,521				(81,584	)			5,352,937
Stock-based compensation			-				-				-				20,118				-				20,118
Shares, end of period			5,454,639				(81,584	)			5,373,055				5,454,639				(81,584	)			5,373,055

11. Earnings Per Share ("EPS")

The following table presents a reconciliation of Net income (loss) and shares used in calculating basis and diluted net income (loss) per common share for the periods indicated:

		Three Months Ended September 30,		Nine Months Ended September 30,
		2024		2023		2024		2023
Numerator for EPS:
Income from continuing operations		$	90			$	130			$	294			$	185
Less: Net income from continuing operations attributable to non-controlling interests			18				22				64				22
Income attributable to LGL Group common shareholders from continuing operations			72				108				230				163
Income (loss) from discontinued operations, net of tax			-				-				-				(28	)
Net income attributable to LGL Group common stockholders		$	72			$	108			$	230			$	135
Denominator for EPS:
Weighted average common shares outstanding - basic			5,352,937				5,352,937				5,352,937				5,352,937
Dilutive effects (a):
Warrants			172,266				2,069				183,915				-
Restricted stock			6,766				-				6,943				-
Weighted average common shares outstanding - diluted			5,531,969				5,355,006				5,543,795				5,352,937
Income per common share attributable to LGL Group common stockholders:
Basic (b):
Income from continuing operations		$	0.01			$	0.02			$	0.04			$	0.03
Income (loss) from discontinued operations			-				-				-				(0.01	)
Net income attributable to LGL Group common stockholders		$	0.01			$	0.02			$	0.04			$	0.03
Diluted (b):
Income from continuing operations		$	0.01			$	0.02			$	0.04			$	0.03
Income (loss) from discontinued operations			-				-				-				(0.01	)
Net income attributable to LGL Group common stockholders		$	0.01			$	0.02			$	0.04			$	0.03

(a)	For the nine months ended September 30, 2023, weighted average shares used for calculating earnings per share excludes warrants to purchase 1,051,664 shares of common stock because the effect of including those common shares in the calculation would have been anti-dilutive.

(b)	Basic and diluted earnings per share are calculated using actual, unrounded amounts. Therefore, the components of earnings per share may not sum to its corresponding total.

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

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, 2024 and December 31, 2023 are summarized below:

		September 30, 2024		December 31, 2023
Raw materials		$	411			$	271
Work in process			14				9
Finished goods			4				-
Total gross inventory			429				280
Reserve for excess and obsolete inventory			(91	)			(76	)
Inventories, net		$	338			$	204

Intangible Assets, Net

The components of intangible assets as of September 30, 2024 and December 31, 2023 are summarized below:

		September 30, 2024		December 31, 2023
Intellectual property		$	214			$	214
Gross intangible assets			214				214
Less: Accumulated amortization			(173	)			(157	)
Intangible assets, net		$	41			$	57

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,
		2024		2023		2024		2023
Spain		$	230			$	94			$	334			$	330
India			94				37				193				60
Australia			84				-				171				5
Romania			-				-				94				-
Canada			-				15				12				105
All other foreign countries			46				21				93				78
Total foreign revenues		$	454			$	167			$	897			$	578
Total domestic revenue		$	196			$	271			$	676			$	704

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 data 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.

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, 2023 as filed with the SEC on April 1, 2024. 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 Company is a holding company engaged in services, merchant investment, and manufacturing business activities. The Company, through its manufacturing business subsidiary, is engaged in the designing, manufacturing, and marketing of high-performance Frequency and Time Reference Standards that form the basis for timing and synchronization in various applications. The Company's primary markets are communications, networking, aerospace, defense, instrumentation, and industrial markets.

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 provide our products and services through our Electronic Instruments and Merchant Investment businesses. Activities not related to our business segments, such as our corporate operations and corporate-level assets and financial obligations, are included in Corporate.

As of September 30, 2024, LGL Group had investments (classified within Cash and cash equivalents and Marketable securities) with a fair value of approximately $41.2 million, of which $24.3 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.

Electronic Instruments Business

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

Merchant Investment Business

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

Market Conditions and Search Process

During the nine months ended September 30, 2024, mergers and acquisitions continued to be impacted by macroeconomic conditions such as higher borrowing costs, increased regulatory scrutiny, political uncertainty, and higher valuation expectations. The initial public offering ("IPO") market has been relatively weak with continued pressure on private equity sponsors to monetize their portfolio companies, which has improved the pace and quality of deal flow to our team.

Our search process leverages our professional networks and relationships, participation in industry events and conferences, monitoring of industry trends and news, and interactions with our shareholders, investment banks, and other intermediaries. We continue to seek small- to mid-sized opportunities with strong cash flow generating capacity that trade at reasonable multiples with competitive products or services and with defensible market positions or intellectual property.

Trends and Uncertainties

We are not aware of any material trends or uncertainties, other than global macroeconomic conditions affecting our industry generally that may reasonably be expected to have a material impact, favorable or unfavorable, on our revenues or income other than those listed below and those listed in Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024.

Changing Interest Rates

The U.S. Federal Reserve raised the federal funds rate a total of four times throughout 2023, resulting in a range from 5.25% to 5.50% as of December 31, 2023. Through the date of filing of this Quarterly Report on Form 10-Q, the U.S. Federal Reserve decreased the federal funds rate twice totaling 75 basis points to a range of 4.50% to 4.75%. It is expected that the U.S. Federal Reserve will continue to decrease the federal funds rate during 2024 and 2025 to, among other things, control inflation; however, the timing of any future decreases remains unclear. If interest rates continue to decline, the returns generated by our investments in U.S. Treasuries could be adversely impacted.

Results of Operations - Consolidated

Three months ended September 30, 2024 compared to three months ended September 30, 2023

The following table presents our Condensed Statements of Operations for the periods indicated:

		Three Months Ended September 30,
(in thousands)		2024		2023		$ Change		% Change
Revenues:
Net sales		$	650			$	438			$	212				48.4	%
Net investment income			531				544				(13	)			-2.4	%
Net (losses) gains			(2	)			(4	)			2				-50.0	%
Total revenues			1,179				978				201				20.6	%
Expenses:
Manufacturing cost of sales			368				195				173				88.7	%
Engineering, selling and administrative			673				584				89				15.2	%
Total expenses			1,041				779				262				33.6	%
Income from continuing operations before income taxes			138				199				(61	)			-30.7	%
Income tax expense (benefit)			48				69				(21	)			-30.4	%
Net income from continuing operations			90				130				(40	)			-30.8	%
Income (loss) from discontinued operations, net of tax			-				-				-			n/m
Net income			90				130				(40	)			-30.8	%
Less: Net income attributable to non-controlling interests			18				22				(4	)			-18.2	%
Net income attributable to LGL Group common stockholders		$	72			$	108			$	(36	)			-33.3	%

Total Revenues

Total revenues increased $201, or 20.6%, from $978 for the three months ended September 30, 2023 to $1,179 for the three months ended September 30, 2024. The increase was primarily driven by a $212, or 48.4%, increase in Net sales from $438 for the three months ended September 30, 2023 to $650 for the three months ended September 30, 2024 primarily due to higher product shipments during Q3 2024.

Total Expenses

Total expenses increased $262, or 33.6%, from $779 for the three months ended September 30, 2023 to $1,041 for the three months ended September 30, 2024. The following items contributed to the overall increase:

•

a $173, or 88.7%, increase in Manufacturing cost of sales from $195 for the three months ended September 30, 2023 to $368 for the three months ended September 30, 2024 driven by sales of higher-cost products; and

•

a $89, or 15.2%, increase in Engineering, selling and administrative from $584 for the three months ended September 30, 2023 to $673 for the three months ended September 30, 2024 driven by changes in headcount and higher wages and benefits.

Gross Margin

Gross margin (Net sales less Manufacturing cost of sales as a percentage of Net sales) decreased 1,210 basis points from 55.5% for the three months ended September 30, 2023 to 43.4% for the three months ended September 30, 2024 reflecting sales of lower margin products.

Income Tax Expense

Income tax expense decreased $21, or 30.4%, from $69 for the three months ended September 30, 2023 to $48 for the three months ended September 30, 2024 primarily due to the increase in Income from continuing operations.

Net Income Attributable to Non-Controlling Interests

Net income attributable to non-controlling interests decreased $4, or 18.2%, from $22 for the three months ended September 30, 2023 to $18 for the three months ended September 30, 2024 primarily due to lower Net income from LGL Systems in 2024 than in 2023.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

The following table presents our Condensed Statements of Operations for the periods indicated:

		Nine Months Ended September 30,
(in thousands)		2024		2023		$ Change		% Change
Revenues:
Net sales		$	1,573			$	1,282			$	291				22.7	%
Net investment income			1,568				1,017				551				54.2	%
Net (losses) gains			(6	)			384				(390	)			-101.6	%
Total revenues			3,135				2,683				452				16.8	%
Expenses:
Manufacturing cost of sales			786				595				191				32.1	%
Engineering, selling and administrative			1,895				1,771				124				7.0	%
Total expenses			2,681				2,366				315				13.3	%
Income from continuing operations before income taxes			454				317				137				43.2	%
Income tax expense			160				132				28				21.2	%
Net income from continuing operations			294				185				109				58.9	%
Income (loss) from discontinued operations, net of tax			-				(28	)			28				-100.0	%
Net income			294				157				137				87.3	%
Less: Net income attributable to non-controlling interests			64				22				42				190.9	%
Net income attributable to LGL Group common stockholders		$	230			$	135			$	95				70.4	%

Total Revenues

Total revenues increased $452, or 16.8%, from $2,683 for the nine months ended September 30, 2023 to $3,135 for the nine months ended September 30, 2024. The following items contributed to the overall increase:

•

a $291, or 22.7%, increase in Net sales from $1,282 for the nine months ended September 30, 2023 to $1,573 for the nine months ended September 30, 2024 primarily due to higher product shipments; and

•

a $551, or 54.2%, increase in Net investment income from $1,017 for the nine months ended September 30, 2023 to $1,568 for the nine months ended September 30, 2024 primarily due to investments in higher yielding United States Treasury money market funds.

The increase was partially offset by a $390, or 101.6%, decrease in Net gains (losses) from $384 for the nine months ended September 30, 2023 to ($6) for the nine months ended September 30, 2024 primarily due to lower mark-to-market movements and no sales of Marketable securities.

Total Expenses

Total expenses increased $315, or 13.3%, from $2,366 for the nine months ended September 30, 2023 to $2,681 for the nine months ended September 30, 2024. The following items contributed to the overall increase:

•

a $191, or 32.1%, increase in Manufacturing cost of sales from $595 for the nine months ended September 30, 2023 to $786 for the nine months ended September 30, 2024 consistent with the overall growth in revenues and sales of higher-cost products during Q3 2024; and

•

a $124, or 7.0%, increase in Engineering, selling and administrative from $1,771 for the nine months ended September 30, 2023 to $1,895 for the nine months ended September 30, 2024 driven by changes in headcount and higher wages and benefits.

Gross Margin

Gross margin (Net sales less Manufacturing cost of sales as a percentage of Net sales) decreased 360 basis points from 53.6% for the nine months ended September 30, 2023 to 50.0% for the nine months ended September 30, 2024 reflecting sales of lower margin products.

Income Tax Expense

Income tax expense increased $28, or 21.2%, from $132 for the nine months ended September 30, 2023 to $160 for the nine months ended September 30, 2024 primarily due to the increase in Income from continuing operations.

Net Income Attributable to Non-Controlling Interests

Net income attributable to non-controlling interests increased $42, or 190.9%, from $22 for the nine months ended September 30, 2023 to $64 for the nine months ended September 30, 2024 primarily due to the consolidation of LGL Systems in June 2023, which has minority shareholders.

Backlog

As of September 30, 2024, our order backlog was $505, an increase of $362, or 253.1%, from $143 as of December 31, 2023 and an increase of $192, or 61.3%, from $313 as of September 30, 2023. The backlog of unfilled orders includes amounts based on signed contracts likely to be fulfilled largely in the next 12 months but usually will ship within the next 90 days. Order backlog is adjusted quarterly to reflect project cancellations, deferrals, and revised project scope and cost, if any.

Results of Operations - Operating Segments

Electronic Instruments

Three months ended September 30, 2024 compared to three months ended September 30, 2023

The following table presents income from continuing operations of our Electronic Instruments segment for the periods indicated:

		Three Months Ended September 30,
(in thousands)		2024		2023		$ Change		% Change
Revenues:
Net sales		$	650			$	438			$	212				48.4	%
Total revenues			650				438				212				48.4	%
Expenses:
Manufacturing cost of sales			368				195				173				88.7	%
Engineering, selling and administrative			238				173				65				37.6	%
Total expenses			606				368				238				64.7	%
Income from continuing operations before income taxes		$	44			$	70			$	(26	)			-37.1	%

Income from Continuing Operations Before Income Taxes

Income from continuing operations before income taxes decreased $26, or 37.1%, from $70 for the three months ended September 30, 2023 to $44 for the three months ended September 30, 2024. The decrease: was primarily due to:

•

a $173, or 88.7%, increase in Manufacturing cost of sales driven by sales of lower margin products; and

•

a $65, or 37.6%, increase in Engineering, selling and administrative driven by higher wages and benefits.

The decrease was partially offset by a $212, or 48.4%, increase in Net sales reflecting higher product shipments during Q3 2024 and higher backlog as of June 30, 2024.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

The following table presents income from continuing operations of our Electronic Instruments segment for the periods indicated:

		Nine Months Ended September 30,
(in thousands)		2024		2023		$ Change		% Change
Revenues:
Net sales		$	1,573			$	1,282			$	291				22.7	%
Total revenues			1,573				1,282				291				22.7	%
Expenses:
Manufacturing cost of sales			786				595				191				32.1	%
Engineering, selling and administrative			667				523				144				27.5	%
Total expenses			1,453				1,118				335				30.0	%
Income from continuing operations before income taxes		$	120			$	164			$	(44	)			-26.8	%

Income from Continuing Operations Before Income Taxes

Income from continuing operations before income taxes decreased $44, or 26.8%, from $164 for the three months ended September 30, 2023 to $120 for the three months ended September 30, 2024. The decrease was primarily due to:

•

a $191, or 32.1%, increase in Manufacturing cost of sales consistent with the overall growth in revenues and sales of higher-cost products during Q3 2024; and

•

a $144, or 27.5%, increase in Engineering, selling and administrative driven by higher wages and benefits.

The decrease was partially offset by a $291, or 22.7%, increase in Net sales driven by operational efficiencies and higher product shipments.

Merchant Investment

Three months ended September 30, 2024 compared to three months ended September 30, 2023

The following table presents income from continuing operations of our Merchant Investment segment for the periods indicated:

		Three Months Ended September 30,
(in thousands)		2024		2023		$ Change		% Change
Revenues:
Net investment income		$	318			$	287			$	31				10.8	%
Total revenues			318				287				31				10.8	%
Expenses:
Engineering, selling and administrative			90				64				26				40.6	%
Total expenses			90				64				26				40.6	%
Income from continuing operations before income taxes		$	228			$	223			$	5				2.2	%

Income from Continuing Operations Before Income Taxes

Income from continuing operations before income taxes increased $5, or 2.2%, from $223 for the three months ended September 30, 2023 to $228 for the three months ended September 30, 2024. The increase was primarily due to:

•

a $31, or 10.8%, increase in Net investment income driven by higher balances invested in United States Treasury money market funds in Q3 2024; and

•

a $26, or 40.6%, increase in Engineering, selling and administrative driven by lower administrative expenses.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

The following table presents income from continuing operations of our Merchant Investment segment for the periods indicated:

		Nine Months Ended September 30,
(in thousands)		2024		2023		$ Change		% Change
Revenues:
Net investment income		$	922			$	542			$	380				70.1	%
Total revenues			922				542				380				70.1	%
Expenses:
Engineering, selling and administrative			217				152				65				42.8	%
Total expenses			217				152				65				42.8	%
Income from continuing operations before income taxes		$	705			$	390			$	315				80.8	%

Income from Continuing Operations Before Income Taxes

Income from continuing operations before income taxes increased $315, or 80.8%, from $390 for the nine months ended September 30, 2023 to $705 for the nine months ended September 30, 2024. The increase was primarily due to a $380, or 70.1%, increase in Net investment income related to the commencement of operations of Lynch Capital International, LLC in June 2023 partially offset by a $65, or 42.8%, increase in Engineering, selling, and administrative driven by higher corporate-level expenses allocated to the Merchant Investment segment.

Corporate

Three months ended September 30, 2024 compared to three months ended September 30, 2023

The following table presents income from continuing operations of our Corporate segment for the periods indicated:

		Three Months Ended September 30,
(in thousands)		2024		2023		$ Change		% Change
Revenues:
Net investment income		$	213			$	257			$	(44	)			-17.1	%
Net (losses) gains			(2	)			(4	)			2				-50.0	%
Total revenues			211				253				(42	)			-16.6	%
Expenses:
Engineering, selling and administrative			345				347				(2	)			-0.6	%
Total expenses			345				347				(2	)			-0.6	%
Loss from continuing operations before income taxes		$	(134	)		$	(94	)		$	(40	)			42.6	%

Loss from Continuing Operations Before Income Taxes

Loss from continuing operations before income taxes increased $40, or 42.6%, from $94 for the three months ended September 30, 2023 to $134 for the three months ended September 30, 2024. The increase was primarily due to a $44, or 17.1%, decrease in Net investment income reflecting lower balances invested in United States Treasury money market funds partially offset by a $2, or 0.6%, decrease in Engineering, selling and administrative related to changes in headcount and higher wages and benefits.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

The following table presents income from continuing operations of our Corporate segment for the periods indicated:

		Nine Months Ended September 30,
(in thousands)		2024		2023		$ Change		% Change
Revenues:
Net investment income		$	646			$	475			$	171				36.0	%
Net (losses) gains			(6	)			384				(390	)			-101.6	%
Total revenues			640				859				(219	)			-25.5	%
Expenses:
Engineering, selling and administrative			1,011				1,096				(85	)			-7.8	%
Total expenses			1,011				1,096				(85	)			-7.8	%
Loss from continuing operations before income taxes		$	(371	)		$	(237	)		$	(134	)			56.5	%

Loss from Continuing Operations Before Income Taxes

Loss from continuing operations before income taxes increased $134, or 56.5%, from ($237) for the nine months ended September 30, 2023 to ($371) for the nine months ended September 30, 2024. The increase was primarily due to a $390, or 101.6%, decrease in Net (losses) gains as there were lower mark-to-market movements and sales of Marketable securities during the nine months ended September 30, 2024.

The increase was partially offset by:

•

a $171, or 36.0%, increase in Net investment income reflecting investments in higher yielding United States Treasury money market funds; and

•

a $85, or 7.8%, decrease in Engineering, selling and administrative reflecting lower accounting and other professional service fees as well as other administrative and corporate expenses.

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, 2024 and December 31, 2023, Cash and cash equivalents were $41,602 and $40,711, respectively.

Cash Flow Activity

The following table presents the cash flow activity for the periods indicated:

		As of September 30,
(in thousands)		2024		2023
Cash and cash equivalents, beginning of period		$	40,711			$	21,507
Cash provided by operating activities			891				454
Cash provided by investing activities			-				18,816
Net change in cash and cash equivalents			891				19,270
Cash and cash equivalents, end of period		$	41,602			$	40,777

Operating Activities

Cash provided by operating activities was $891 for the nine months ended September 30, 2024 compared to cash used in operating activities of $454 for the nine months ended September 30, 2023, an increase of $437, primarily due to a $390 decrease in Net gains (losses) from $384 for the nine months ended September 30, 2023 to ($6) for the nine months ended September 30, 2024 as there were lower mark-to-market movements and no sales of Marketable securities during the nine months ended September 30, 2024 partially offset by a $94 decrease in the net change in operating assets and liabilities from $617 for the nine months ended September 30, 2023 to $523 for the nine months ended September 30, 2024.

Our working capital metrics and ratios were as follows:

(in thousands)		September 30, 2024		December 31, 2023
Current assets		$	42,274			$	41,566
Less: Current liabilities			739				474
Working capital		$	41,535			$	41,092
Current ratio			57.2				87.7

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 provided by investing activities was $0 for the nine months ended September 30, 2024 compared to cash provided by investing activities of $18,816 for the nine months ended September 30, 2023, a decrease of $18,816, primarily due to sales of IronNet, Inc. during the nine months ended September 30, 2023.

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, 2024, there have been no material changes in our contractual obligations from December 31, 2023, a description of which may be found in Part II, Item 7. Management Discussion and Analysis - Liquidity and Capital Resources - Contractual Obligations in the 2023 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, 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, 2023.

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, 2024 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, 2024, 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, 2024 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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

We are not aware of any material trends or uncertainties, other than national economic conditions affecting our industry generally, that may reasonably be expected to have a material impact, favorable or unfavorable, on our revenues or income other than those listed in Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 5.

Other Information

During the three months ended September 30, 2024, noneof our directors or officers, as defined in Section 16 of the Exchange Act, adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408 of Regulation S-K of the Exchange Act.

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, 2024 (and are numbered in accordance with Item 601 of Regulation S-K):

Exhibit No.		Description
3.1		Certificate of Incorporation of The LGL Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on August 31, 2007).
3.2		The LGL Group, Inc. By-Laws (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed with the SEC on August 31, 2007).
3.3		The LGL Group, Inc. Amendment No. 1 to By-Laws (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on June 17, 2014).
3.4		The LGL Group, Inc. Amendment No. 2 to By-Laws (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on February 21, 2020).
3.5		The LGL Group, Inc. Amendment No. 3 to By-Laws (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on February 26, 2020).
3.6		The LGL Group, Inc. Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on January 4, 2022).
31.1		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1		Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2		Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

Exhibit No.		Description
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.*
101.SCH		Inline XBRL Taxonomy Extension Schema Document*
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104		The cover page for the Company's Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101*

*	Filed herewith

**

In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

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.

	THE LGL GROUP, INC. (Registrant)
November 13, 2024	By:	/s/ Timothy Foufas
		TIMOTHY FOUFAS
		Co-Chief Executive Officer (Principal Executive Officer)
November 13, 2024	By:	/s/ Christopher L. Nossokoff
		CHRISTOPHER L. NOSSOKOFF
		Vice President - Finance (Principal Financial Officer)