LGL 10-K & 10-Q changes, risk factors and insider trading
Lgl Group Inc. · NYSE · Electronic Components, Nec · CIK 61004 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Removed heading “Summary Risk Factors”
Removed heading “Risks Relating to Our Structure”
Removed heading “Risks Relating to Liquidity and Capital Requirements”
Removed heading “Risks Relating to Our Merchant Investment Business”
Removed heading “Risks Related to Our Business and Industry”
Removed heading “Risks Related to Our Securities”
Removed heading “Risks Related to the Separation”
Removed heading “The warrants to purchase shares of our common stock may not have any value.”
Removed heading “An active trading market for the warrants to purchase shares of our common stock may not be sustained.”
Removed heading “Holders of the warrants to purchase shares of our common stock will have no rights as a common stockholder until such holders exercise their warrants and acquire shares of our common stock.”
Removed heading “Adjustments to the exercise price of the warrants, or the number of shares of common stock for which the warrants are exercisable, following certain corporate events may not fully compensate warrant holders for the value they would have received if they held the common stock underlying the warrants at the time of such events.”
Largest changes
Our business, financial condition, operating results and cash flows may be adversely affected by changes in global economic conditions and geopolitical risks, including credit market conditions, trade policies, tariffs, levels of consumer and business confidence, commodity prices and availability, inflationary pressure, exchange rates, levels of government spending and deficits, social or political conditions,see in full comparisonglobal pandemics,and other challenges that could affect the global economy including impacts associated with the continuing developments in theRussianwar againstUkraine,Ukraine and sanctions which have been announced by the United States and other countries against Russia,conflicts in Israel and the Middle East, and attacks on cargo ships in the Red Sea,which have caused significant uncertainty, adding to continuing concerns aboutglobal trade flows,supply chain disruptions,higher transportation costs, higherinflation and increases in interest rates in the markets in which we operate.TheseSimilareconomicgeopolitical tensions andgeopoliticalpoliticalconditionsand/or armed conflicts, including tensions between the U.S. and China, China and Taiwan, and the conflicts between the U.S. and Iran and Israel and Palestine couldaffectadverselybusinessesimpactsuchourasfinancialoursperformanceinandaglobalnumber of ways.operations. Such conditions could have an adverse impact on our flexibility to react to changing economic and business conditions and on our ability to fund our operations. In addition, restrictions on credit availability could adversely affect the ability of our customers to make payments. Similarly, credit restrictions may adversely affect our supplier base and increase the potential for one or more of our suppliers to experience financial distress.
“We are subject to the trade policies, export/import controls, and other rules and regulations, including tariffs, trade sanctions, and license requirements of the U.S. and other government authorities. During the first Trump Administration from 2017 to 2021, certain tariffs and retaliatory tariffs, as well as other trade restrictions, were imposed on various products and materials. In 2025, President Trump again imposed tariffs and retaliatory tariffs against U.S. …”see in full comparison
“Risks Relating to Liquidity and Capital Requirements”see in full comparison
“During the first Trump Administration from 2017 to 2021, certain tariffs and retaliatory tariffs, as well as other trade restrictions, were imposed on various products and materials. President Trump again has signaled that his new Administration will impose tariffs and retaliatory tariffs against U.S. trading partners. During his election campaign, President Trump indicated that he would impose a 25% tariff against all goods imported from Canada and Mexico, a 60% tariff on goods from China, and a blanket tariff of 10% to 20% on other imports to the U.S. …”see in full comparison
“Adjustments to the exercise price of the warrants, or the number of shares of common stock for which the warrants are exercisable, following certain corporate events may not fully compensate warrant holders for the value they would have received if they held the common stock underlying the warrants at the time of such events.”see in full comparison
“Holders of the warrants to purchase shares of our common stock will have no rights as a common stockholder until such holders exercise their warrants and acquire shares of our common stock.”see in full comparison
Full comparison: every changed paragraph (29)
Summary Risk Factors
Risks Relating to Our Structure
Risks Relating to Liquidity and Capital Requirements
Risks Relating to Our Merchant Investment Business
Risks Related to Our Business and Industry
Risks Related to Our Securities
Risks Related to the Separation
All investments, including those in related party mutual funds, are overseen by the independent InvestmentRelated Party Committee of the Board of Directors (the "InvestmentRelated Party Committee"). The InvestmentRelated Party 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.
Our business, financial condition, operating results and cash flows may be adversely affected by changes in global economic conditions and geopolitical risks, including credit market conditions, trade policies, tariffs, levels of consumer and business confidence, commodity prices and availability, inflationary pressure, exchange rates, levels of government spending and deficits, social or political conditions, global pandemics, and other challenges that could affect the global economy including impacts associated with the continuing developments in the Russian war against Ukraine,Ukraine and sanctions which have been announced by the United States and other countries against Russia, conflicts in Israel and the Middle East, and attacks on cargo ships in the Red Sea, which have caused significant uncertainty, adding to continuing concerns about global trade flows, supply chain disruptions, higher transportation costs, higher inflation and increases in interest rates in the markets in which we operate. TheseSimilar economicgeopolitical tensions and geopoliticalpolitical conditionsand/or armed conflicts, including tensions between the U.S. and China, China and Taiwan, and the conflicts between the U.S. and Iran and Israel and Palestine could affectadversely businessesimpact suchour asfinancial oursperformance inand aglobal number of ways.operations. Such conditions could have an adverse impact on our flexibility to react to changing economic and business conditions and on our ability to fund our operations. In addition, restrictions on credit availability could adversely affect the ability of our customers to make payments. Similarly, credit restrictions may adversely affect our supplier base and increase the potential for one or more of our suppliers to experience financial distress.
We are subject to the trade policies, export/import controls, and other rules and regulations, including tariffs, trade sanctions, and license requirements of the U.S. and other government authorities. During the first Trump Administration from 2017 to 2021, certain tariffs and retaliatory tariffs, as well as other trade restrictions, were imposed on various products and materials. In 2025, President Trump again imposed tariffs and retaliatory tariffs against U.S. trading partners, some countries responded with new or increased tariffs of their own, and the amount of the import tariff and the number of products subject to tariffs changed multiple times based on actions by the U.S. government .However, there is currently significant uncertainty about the future relationship between the United States and various other countries with respect to trade policies, treaties, tariffs and customs duties. On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). Following the Supreme Court’s decision, the Trump Administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. 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.
During the first Trump Administration from 2017 to 2021, certain tariffs and retaliatory tariffs, as well as other trade restrictions, were imposed on various products and materials. President Trump again has signaled that his new Administration will impose tariffs and retaliatory tariffs against U.S. trading partners. During his election campaign, President Trump indicated that he would impose a 25% tariff against all goods imported from Canada and Mexico, a 60% tariff on goods from China, and a blanket tariff of 10% to 20% on other imports to the U.S. On February 1, 2025, President Trump issued an Executive Order imposing tariffs at various levels on imports from Canada, Mexico, and China. The newly imposed tariffs have resulted in immediate threats of retaliatory tariffs against U.S. goods and resulted in discussions with the countries which have delayed many of the U.S. imposed tariffs while discussion with each trading partner continue.
The above and other potentialFuture tariffs and trade restrictions may cause the prices of our vendors' products to increase, which could reduce demand for such products, or reduce our vendors' margins, and adversely impact their revenues, financial results, and ability to service debt. This in turn could adversely affect our financial condition and results of operations. In addition, to the extent changes in the political environment have a negative impact on us or on the markets in which we operate our business, our results of operations and financial condition could be materially and adversely impacted in the future. At this time, the situation remains dynamic and it remains unclear what the U.S. government or foreign governments will or will not do with respect to additional tariffs that may be imposed or international trade agreements and policies.
Inflation in the United States decreased from 6.5% as of December 31, 2023 to 2.9% as of December 31, 2024,2024 to 2.7% as of December 31, 2025, which is still above the U.S. Federal Reserve's long-term target of 2.0%. InflationIf isinflation expected to remainremains elevated in 2025 and the continued higher inflation may have an adverse impact on2026, our Manufacturing cost of sales along with Engineering, selling and administrative expenses, as these costsexpenses could increase at a rate higher than our revenue.
The U.S. Federal Reserve decreased the federal funds rate a total of three times throughout 2024,2025, resulting in a range from 4.25%3.50% to 4.50%3.75% as of December 31, 2024. However, it is expected that the U.S. Federal Reserve will continue to decrease the federal funds rate steady during 2025 to, among other things, control inflation.2025. If interest rates continue to decline, the returns generated by our investments in U.S. Treasuries could be adversely impacted.
A significant percentage of our sales has been, and is expected to be, concentrated among a relatively small number of customers. In 2025, the Company's three largest customers accounted for $453, or 18.5%, $394, or 16.1%, and $253, or 10.3%, respectively, of the Company’s Net sales. In 2024, the Company’sCompany's two largest customers accounted for $310, or 13.9%, and $261, or 11.7%, respectively, of the Company’s Net sales. In 2023, the Company’s two largest customers accounted for $399, or 23.1%, and $236, or 13.7%, respectively, of the Company’s Net sales. We anticipate that this concentration of sales among these customers will continue in the future. The loss of a significant customer, changes in customer buying behaviors or a substantial decrease in sales to such a customer could have a material adverse effect on our sales and operating results. In addition, any consolidation among our key customers may further increase our customer concentration risk.
From time to time, we may also be subject to U.S. Governmentgovernment investigations relating to our or our customers’ operations.operations and products. In particular, for international business, we are required to submit a request for AES validation used by U.S. Governmentgovernment agencies to measure the compliance of U.S. exports with U.S. export control laws. The cost of cooperating or complying with such audits or investigations may adversely affect our financial results.
The warrants to purchase shares of our common stock may not have any value.
The warrants to purchase shares of our common stock are "European style warrants." Before the Separation, the warrants had an exercise price of $12.50 per share and only become exercisable on the earlier of (i) the expiration date, November 16, 2025, and (ii) such date that the 30-day volume weighted average price per share ("VWAP") of our common stock was greater than or equal to $17.50. Subsequent to the Separation, the warrant exercise price of $12.50 was adjusted to $4.75, and the warrant trigger price for potential acceleration of the exercise date of $17.50 was adjusted to $6.65. The previously announced distribution of MtronPTI shares under the Separation was a qualifying dilutive event that required an adjustment under Section 10 of the warrant agreement, with the exercise price of the warrants and the trigger price for the potential acceleration of the exercise date for its warrants adjusted using the calculation provided within the warrant agreement.
The warrants became exercisable on March 4, 2025, and may be exercised in accordance with the terms of the warrant agreement until their expiration.
This exercise price does not necessarily bear any relationship to established criteria for valuation of our common stock, such as book value per share, cash flows, or earnings; and the holder of such warrant should not consider this exercise price as an indication of the current or future market price of our common stock. There can be no assurance that the market price of our common stock will exceed $4.75 per share on November 16, 2025, the expiration date of the warrants, or at any other time the warrants may be exercised prior to such date. If the market price of our common stock on such date does not exceed $4.75 per share, the warrants will be of no value.
An active trading market for the warrants to purchase shares of our common stock may not be sustained.
If an active market for the warrants to purchase shares of our common stock is not sustained, it may be difficult for the holders thereof to sell such warrants without depressing the market price for such securities.
Holders of the warrants to purchase shares of our common stock will have no rights as a common stockholder until such holders exercise their warrants and acquire shares of our common stock.
Until warrant holders acquire shares of our common stock upon exercise of the warrants, warrant holders will have no rights with respect to the shares of our common stock underlying such warrants. Upon the acquisition of shares of our common stock upon exercise of the warrants, the holders thereof will be entitled to exercise the rights of a common stockholder only as to matters for which the record date for the matter occurs after the exercise date of the warrants.
Adjustments to the exercise price of the warrants, or the number of shares of common stock for which the warrants are exercisable, following certain corporate events may not fully compensate warrant holders for the value they would have received if they held the common stock underlying the warrants at the time of such events.
The warrants provide for adjustments to the exercise price of the warrants following a number of corporate events, including (i) our issuance of a stock dividend or the subdivision or combination of our common stock, (ii) our issuance of rights, options or warrants to purchase our common stock at a price below the 10-day VWAP of our common stock, (iii) a distribution of capital stock of the Company or any subsidiary other than our common stock, rights to acquire such capital stock, evidences of indebtedness or assets, (iv) our issuance of a cash dividend on our common stock, and (v) certain tender offers for our common stock by the Company or one or more of our wholly-owned subsidiaries. The warrants also provide for adjustments to the number of shares of common stock for which the warrants are exercisable following our issuance of a stock dividend or the subdivision or combination of our common stock. Any adjustment made to the exercise price of the warrants or the number of shares of common stock for which the warrants are exercisable following a corporate event in accordance with these provisions may not fully compensate warrant holders for the value they would have received if they held the common stock underlying the warrants at the time of the event.
We received an opinion of a tax expert to the effect that, for U.S. federal income tax purposes, the Separation qualifies for tax-free treatment under certain sections of the Internal Revenue Code.Code of 1986, as amended (the "Code"). However, the opinion relies on certain assumptions, representations and undertakings, including those relating to the past and future conduct of our business, and the opinion would not be valid if such assumptions, representations and undertakings were incorrect. Furthermore, the opinion is not binding on the Internal Revenue Service ("IRS") or the courts. If, notwithstanding receipt of the opinion, the Separation or certain related transactions are determined to be taxable, we would be subject to a substantial tax liability. In addition, if the Separation is taxable, each holder of our common stock who received shares of M-tron Industries, Inc. in connection with the Separation would generally be treated as receiving a taxable dividend in an amount equal to the fair value of the shares received.
There is a risk that the Distribution may not qualify for tax-free treatment and, accordingly, will be a taxable transaction to the Company’s stockholders. While the Distribution is intended to be tax-free under Section 355 of the Internal Revenue Code of 1986, as amended (the "Code"),Code, and while we believe that the Company’s stockholders should not recognize gain or loss as a result of the Distribution and that no amount should be included in their income as a result of the Distribution for U.S. federal income tax purposes, neither the Company nor MtronPTI has applied or will apply for a private letter ruling from the IRS with respect to the tax consequences of the Distribution. Accordingly, there can be no assurance that the IRS or another taxing authority will not assert that the Distribution is taxable to the Company, MtronPTI or the Company’s stockholders. If the Distribution is determined to be taxable for U.S. federal income tax purposes, the receipt of MtronPTI common stock in the Separation is expected to be treated as a distribution of property in an amount equal to the fair market value of the stock received. We believe that a reasonable approach to determine the fair market value of the shares of MtronPTI common stock received would be to use the volume weighted average price of MtronPTI common stock on the first full trading day following the Distribution. In such circumstances, the Distribution of MtronPTI common stock in the Separation would be treated as ordinary dividend income to the extent considered paid out of the Company’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Distributions in excess of the Company’s current year and accumulated earnings and profits will be treated as a non-taxable return of capital, which reduces basis, to the extent of the holder’s basis in its shares of the Company’s common stock, as applicable, and thereafter as capital gain. The amount of those earnings and profits is not determinable at this time because it will depend on the Company’s income for the entire tax year in which the distribution occurs.
As a result of the Separation, Marc Gabelli serves as special advisor to the Chairman of the Board of Directors of MtronPTI and serves as Executive Chairman of the Board of Directors and co-Chief Executive Officer of the Company. Such dual roles could create, or appear to create, potential conflicts of interest when the Company and MtronPTI’s officers and directors face decisions that could have different implications for the two companies.
Management's Discussion & Analysis (MD&A)
Removed heading “Income from Discontinued Operations, Net of Tax”
Largest changes
“U.S. trade policy, including the imposition, modification, or removal of tariffs remains subject to change due to legislative, regulatory, and judicial developments. Changes in tariff regimes or trade restrictions may increase the cost of imported components, raw materials, or finished goods. If such cost increases occur and exceed our ability to offset them through pricing actions, cost reduction, or supply chain adjustments, our margins and results of operations could be adversely affected. …”see in full comparison
“The current U.S. federal administration has proposed or imposed tariffs on certain products entering the United States imported from other countries. Additionally, foreign governments have imposed retaliatory tariffs on products exported from the United States. The increase in tariffs could have an adverse impact on Manufacturing cost of goods as these costs could increase at a higher rate than our revenues. As a result, we may increase the prices we charge our customers.”see in full comparison
The U.S. Federal Reserve decreased the federal funds rate a total of three times throughoutsee in full comparison2024,2025, resulting in a range from4.25%3.50% to4.50%3.75% as of December 31,2024.2025. Through the date of filing of this Report, the U.S. Federal Reserve has maintained the federal funds rate between4.25%3.50% to4.50%. It is expected that the U.S. Federal Reserve will continue to decrease the federal funds rate during 2025 to, among other things, control inflation; however, the timing of any future changes remains unclear.3.75%. If interest rates continue to decline, the returns generated by our investments in U.S. Treasuries could be adversely impacted.
“Loss from continuing operations before income taxes increased $232, or 145.9%, from $159 in 2023 to $391 in 2024 primarily due to a $389, or 101.3%, decrease in Net gains (losses) from $384 in 2023 to ($5) in 2024 driven by mark-to-market movements on Marketable securities in 2024 versus realized gains on the related sales of mutual fund investments in 2023 partially offset by a $146, or 20.9%, increase in Net investment income from $697 in 2023 to $843 in 2024 driven by higher balances invested in United States Treasury money market funds.”see in full comparison
“Cash provided by investing activities was $0 in 2024 compared to $18,819 in 2023, a decrease of $18,819 primarily due to the sale of the Company's investments in marketable securities, including IrontNet, Inc. and mutual fund investments during Q1 and Q2 2023 at a gain as well as the consolidation of non-controlling interests related to LGL Systems Acquisition Holding Company, LLC.”see in full comparison
Full comparison: every changed paragraph (30)
For a discussion of the year ended December 31, 20232024 compared to the year ended December 31, 2022,2023, refer to Part II, 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, 2023,2024, filed with the SEC on AprilMarch 1,31, 2024,2025, which is available free of charge on the SEC's website at https://www.sec.gov and on our website at www.lglgroup.com.
We are not aware of any material trends or uncertainties, other than the global 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 discussed below and listed in Part I, Item 1A, Risk Factors, of this Report .
The U.S. Federal Reserve decreased the federal funds rate a total of three times throughout 2024,2025, resulting in a range from 4.25%3.50% to 4.50%3.75% as of December 31, 2024.2025. Through the date of filing of this Report, the U.S. Federal Reserve has maintained the federal funds rate between 4.25%3.50% to 4.50%. It is expected that the U.S. Federal Reserve will continue to decrease the federal funds rate during 2025 to, among other things, control inflation; however, the timing of any future changes remains unclear.3.75%. If interest rates continue to decline, the returns generated by our investments in U.S. Treasuries could be adversely impacted.
U.S. trade policy, including the imposition, modification, or removal of tariffs remains subject to change due to legislative, regulatory, and judicial developments. Changes in tariff regimes or trade restrictions may increase the cost of imported components, raw materials, or finished goods. If such cost increases occur and exceed our ability to offset them through pricing actions, cost reduction, or supply chain adjustments, our margins and results of operations could be adversely affected. We may seek to adjust prices charged to customers; however, there can be no assurance that such adjustments would be successful.
The current U.S. federal administration has proposed or imposed tariffs on certain products entering the United States imported from other countries. Additionally, foreign governments have imposed retaliatory tariffs on products exported from the United States. The increase in tariffs could have an adverse impact on Manufacturing cost of goods as these costs could increase at a higher rate than our revenues. As a result, we may increase the prices we charge our customers.
Total revenues decreased $123, or 2.9%, from $4,292 in 2024 to $4,169 in 2025. The overall decrease was primarily driven by a $374, or 18.1%, decrease in Net investment income from $2,071 in 2024 to $1,697 in 2025 reflecting lower yields earned on our investments in United States Treasury money market funds within the Merchant Investment and Corporate segments.
Total revenues increased $614, or 16.7%, from $3,678 in 2023 to $4,292 in 2024. The following items contributed to the overall increase:
The increasedecrease was partially offset by a $389,$227, or 101.3%,10.2%, decreaseincrease in Net gains (losses)sales from $384 in 2023 to ($5)$2,226 in 2024 to $2,453 in 2025 primarily due to mark-to-markethigher movementsproduct on Marketable securities in 2024 versus realized gains on the related sales of mutual fund investments in 2023shipments within the CorporateElectronic Instruments segment.
Gross margin (Net sales less Manufacturing cost of sales as a percentage of Net sales) decreased 9010 basis points from 53.9% in 2023 to 53.0% in 2024 to 52.9% in 2025 primarily due to several contracts with lower margin products within the Electronicslight Instrumentsincrease segment.in Manufacturing cost of sales.
As of December 31, 2024,2025, our order backlog was $336,$625, aan increase of $193,$289, compared to $143$336 as of December 31, 20232024 primarily due to the timing and size of orders. The backlog of unfilled orders includes amounts based on purchase orders, which we have determined are firm orders likely to be fulfilled primarily in the next 12 months.
Income tax expense decreased $124,$683, or 41.2%,385.9%, from $301 in 2023 to $177 in 2024 to ($506) in 2025 primarily due to return-to-provisionthe truereversal upsof ina 2024previously partiallyrecorded offsetuncertain tax position as the related tax matter is no longer subject to examination by the increaserelevant intaxing Income from continuing operations discussed above.authority.
Income from Discontinued Operations, Net of Tax
Income (loss) from discontinued operations increased $28, or 100.0%, from ($28) in 2023 to $0 in 2024 primarily due to Separation costs incurred 2023.
Net income attributable to non-controlling interests increaseddecreased $42$23 from $48 in 2023 to $90 in 2024 to $67 in 2025 primarily due to higherlower income from LGL Systems.
The following table presents income frombefore continuingincome operationstaxes of our Electronic Instruments segment for the periods indicated:
Income from Continuing Operations Before Income Taxes
Income from continuing operations before income taxes increased $91,$53, or 59.9%,21.8%, from $152 in 2023 to $243 in 2024.2024 to $296 in 2025. The increase was primarily driven by a $498,$227, or 28.8%,10.2%, increase in Net sales from $1,728 in 2023 to $2,226 in 2024 to $2,453 in 2025 primarily due to additional contracts won in 2024.
The following table presents income frombefore continuingincome operationstaxes of our Merchant Investment segment for the periods indicated:
Income from Continuing Operations Before Income Taxes
Income before income taxes decreased $282 from $847 in 2024 to $565 in 2025 primarily due to:
Income from continuing operations before income taxes increased $194 from $653 in 2023 to $847 in 2024 due to an increase in Net investment income driven by higher balances invested in United States Treasury money market funds in 2024 partially offset by higher corporate-level expenses allocated to the Merchant Investment segment.
The following table presents income frombefore continuingincomes operationstaxes of the Corporate segment for the periods indicated:
Loss from Continuing Operations Before Income Taxes
Loss before income taxes increased $221, or 56.5%, from $391 in 2024 to $612 in 2025 primarily due to:
Loss from continuing operations before income taxes increased $232, or 145.9%, from $159 in 2023 to $391 in 2024 primarily due to a $389, or 101.3%, decrease in Net gains (losses) from $384 in 2023 to ($5) in 2024 driven by mark-to-market movements on Marketable securities in 2024 versus realized gains on the related sales of mutual fund investments in 2023 partially offset by a $146, or 20.9%, increase in Net investment income from $697 in 2023 to $843 in 2024 driven by higher balances invested in United States Treasury money market funds.
Cash provided by operating activities was $874$70 in 20242025 compared to $385$874 in 2023,2024, ana increasedecrease of $489$804 primarily due to the following:
The increase was partially offset by:
InvestingFinancing Activities
Cash used in financing activities was $141 in 2025 compared to $0 in 2024, a decrease of $141 primarily due to the repurchase of common stock partially offset by the net proceeds from the exercise of warrants.
Cash provided by investing activities was $0 in 2024 compared to $18,819 in 2023, a decrease of $18,819 primarily due to the sale of the Company's investments in marketable securities, including IrontNet, Inc. and mutual fund investments during Q1 and Q2 2023 at a gain as well as the consolidation of non-controlling interests related to LGL Systems Acquisition Holding Company, LLC.
What changed in the latest 10-Q
Risk Factors
New heading “Risks Related to the Skyline Transaction”
New heading “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.”
New heading “Our Skyline investment is illiquid and difficult to value, and its carrying value may not be realized.”
New heading “Risk Related to Our Securities”
New heading “Stockholders who did not fully exercise their subscription rights in our June 2026 rights offering experienced a reduction in their proportionate ownership and voting interests.”
New heading “We have broad discretion over the use of the net proceeds from the rights offering, and we may not use them effectively.”
New heading “The subscription rights and our common stock have been subject to price volatility, and the transition of the rights to trading over the counter may have affected their liquidity.”
Largest changes
“The subscription rights and our common stock have been subject to price volatility, and the transition of the rights to trading over the counter may have affected their liquidity.”see in full comparison
“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.”see in full comparison
“Stockholders who did not fully exercise their subscription rights in our June 2026 rights offering experienced a reduction in their proportionate ownership and voting interests.”see in full comparison
“We have broad discretion over the use of the net proceeds from the rights offering, and we may not use them effectively.”see in full comparison
“Our Skyline investment is illiquid and difficult to value, and its carrying value may not be realized.”see in full comparison
Full comparison: every changed paragraph (13)
WeOther 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, other than national economic conditions affecting our industry generally,uncertainties that may reasonably be expected to have a material impact, favorable or unfavorable, on our revenues or income other thanbeyond those listeddescribed in Item 1A,1A. Risk Factors,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 carrying amount of our investment in Skyline SPV. 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.
Risk Related to Our Securities
Stockholders who did not fully exercise their subscription rights in our June 2026 rights offering experienced a reduction in their proportionate ownership and voting interests.
On June 5, 2026, we distributed 6,550,435 transferable subscription rights to purchase shares of our common stock at a subscription price of $6.90 per share. Stockholders who did not exercise their subscription rights in full, or who sold or did not use their rights, own a smaller proportional interest in the Company, and their voting and economic interests were reduced, as a result of the shares issued in the offering.
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.
The subscription rights and our common stock have been subject to price volatility, and the transition of the rights to trading over the counter may have affected their liquidity.
The subscription rights were listed on the NYSE American under the symbol "LGL RT" and subsequently traded over the counter under the symbol "LGLGR." Securities that trade over the counter may have less liquidity and greater price volatility than securities listed on a national securities exchange, which may have affected the ability of holders to sell their rights at a desired time or price. The market price of our common stock may also fluctuate as a result of the additional shares issued in the offering.
Management's Discussion & Analysis (MD&A)
New heading “Recent Developments”
New heading “Demand and Capacity for Precision Timing and Frequency Products”
New heading “Income Tax Expense”
New heading “Net Income Attributable to Non-Controlling Interests”
New heading “Investing Activities”
New heading “Fair Value of the Skyline Note”
Largest changes
“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. …”see in full comparison
Full comparison: every changed paragraph (58)
The LGL Group investment business is comprised of various investment vehicles in which LGL Group is either shareholder, partner, or has general partner interests, and through which LGL Group 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 Group 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.
As of MarchJune 31,30, 2026, LGL Group had investments (classified within Cash and cash equivalents and Marketable securities) with a fair value of approximately $25.9$45.2 million.million, of which $26.2 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 consolidatedCondensed balanceConsolidated sheets.Balance Sheets.
Recent Developments
At the Company's 2026 Annual Meeting of Stockholders held on May 12, 2026, stockholders approved an amendment to The LGL Group, Inc. 2021 Incentive Plan (the "Plan") to increase the number of shares of common stock authorized for issuance thereunder by 1,500,000 shares. Following this amendment, 2,276,512 shares remain available for future grant under the Plan as of June 30, 2026. The increase in the share reserve was made to (i) reward long-term Company performance; (ii) link employees' interests to long-term stockholder value creation; and (iii) enable the Company to attract and retain top-tier talent in a competitive marketplace.
The Company intends to file a Registration Statement on Form S-8 to register the additional shares. See Note 9 - Stock-Based Compensation to the Condensed Consolidated Financial Statements for further information.
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.
Total revenues increased $167,$229, or 18.2%,24.8%, from $918$924 for the three months ended MarchJune 31,30, 2025 to $1,085$1,153 for the three months ended MarchJune 31,30, 2026. The increase was primarily due to a $184,$259, or 36.9%,52.7%, increase in Net sales from $498$491 for the three months ended MarchJune 31,30, 2025 to $682$750 for the three months ended MarchJune 31,30, 2026 driven by higher product shipments as orders in backlog as of DecemberMarch 31, 2025.2026 converted to revenue.
The increase is partially offset by a $28, or 6.7%, decrease in Net investment income from $417 for the three months ended March 31, 2025 to $389 for the three months ended March 31, 2026 primarily due to lower yields on investments in U.S. Treasury money market funds.
Total expenses increased $993,$645, or 113.2%,67.5%, from $877$955 for the three months ended MarchJune 31,30, 2025 to $1,870$1,600 for the three months ended MarchJune 31,30, 2026. The following items contributed to the overall increase:
Gross margin (Net sales less Manufacturing cost of sales as a percentage of Net sales) decreased 140780 basis points from 52.4%57.0% for the three months ended MarchJune 31,30, 2025 to 51.0%49.2% for the three months ended MarchJune 31,30, 2026 reflecting achanges lower marginin product and pricing mix asassociated wellwith asvolume-based generalpricing increasesextended to a single customer in theconnection costwith ofincreased materialsorder and components.volume.
Income tax expense (benefit) decreased $208,$109, or 742.9%,778.6%, from $28$14 for the three months ended MarchJune 31,30, 2025 to ($180$95) for the three months ended MarchJune 31,30, 2026 primarily due to the decreaseincrease in IncomeLoss before income taxes.
Net income attributable to non-controlling interests decreased $2$5 from $19$6 for the three months ended MarchJune 31,30, 2025 to $17$1 for the three months ended MarchJune 31,30, 2026 primarily due to lower yields on U.S.United States Treasury money market funds.funds and formation and other costs related to investment in Skyline SPV.
The following table presents our Condensed Statements of Operations for the periods indicated:
Total Revenues
Total revenues increased $396, or 21.5%, from $1,842 for the six months ended June 30, 2025 to $2,238 for the six months ended June 30, 2026. The increase was primarily due to a $443, or 44.8%, increase in Net sales from $989 for the six months ended June 30, 2025 to $1,432 for the six months ended June 30, 2026 primarily due to higher product shipments as orders in backlog converted to revenues.
The increase was partially offset by a $44, or 5.2%, decrease in Net investment income from $845 for the six months ended June 30, 2025 to $801 for the six months ended June 30, 2026 driven by lower yields on investments in United States Treasury money market funds.
Total Expenses
Total expenses increased $1,638, or 89.4%, from $1,832 for the six months ended June 30, 2025 to $3,470 for the six months ended June 30, 2026. The following items contributed to the overall increase:
Gross Margin
Gross margin (Net sales less Manufacturing cost of sales as a percentage of Net sales) decreased 460 basis points from 54.7% for the six months ended June 30, 2025 to 50.1% for the six months ended June 30, 2026 reflecting changes in product and pricing mix associated volume-based pricing extended to a single customer in connection with increased order volume.
Income Tax Expense
Income tax expense (benefit) decreased $317, or 754.8%, from $42 for the six months ended June 30, 2025 to ($275) for the six months ended June 30, 2026 primarily due to the decrease in Income before income taxes.
Net Income Attributable to Non-Controlling Interests
Net income attributable to non-controlling interests decreased $7 from $25 for the six months ended June 30, 2025 to $18 for the six months ended June 30, 2026 primarily due to lower yields on United States Treasury money market funds.
As of MarchJune 31,30, 2026, our order backlog was $1,525,$3,628, an increase of $900,$3,003, or 144.0%,480.5%, from $625 as of December 31, 2025 and an increase of $1,230,$3,101, or 416.9%,588.4%, from $295$527 as of MarchJune 31,30, 2025. 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.
The following table presents income from continuing operations of our Electronic Instruments segment for the periods indicated:
Income before income taxes decreased $40, or 58.8%, from $68 for the three months ended June 30, 2025 to $28 for the three months ended June 30, 2026. The decrease was primarily due to the following:
The decrease was partially offset by a $259, or 52.7%, increase in Net sales reflecting higher product shipments as orders in backlog as of March 31, 2026 converted to revenue.
Income Before Income Taxes
Income before income taxes decreased $2, or 10.5%, from $19 for the three months ended March 31, 2025 to $17 for the three months ended March 31, 2026. The decrease was primarily due to the $186, or 38.8%, increase in Total expenses driven by higher Manufacturing cost of sales reflecting higher revenues and general increases in the cost of materials and components as well as engineering and sales and marketing costs consistent with the growth in Net sales partially offset by the $184, or 36.9%, increase in Net sales reflecting higher backlog as of December 31, 2025.
The following table presents income from continuing operations of our MerchantElectronic InvestmentInstruments segment for the periods indicated:
Income Before Income Taxes
Income before income taxes decreased $55$42, or 48.3%, from $153$87 for the threesix months ended MarchJune 31,30, 2025 to $98$45 for the threesix months ended MarchJune 31,30, 20262026. The decrease was primarily due to lowerthe yields on investments in U.S. Treasury money market funds as well as higher corporate allocations.following:
The decrease was partially offset by a $443, or 44.8%, increase in Net sales driven by higher product shipments as orders in backlog converted to revenues.
The following table presents income from continuing operations of our CorporateMerchant Investment segment for the periods indicated:
Income before income taxes decreased $111 from $148 for the three months ended June 30, 2025 to $37 for the three months ended June 30, 2026. The following items contributed to the overall decrease:
The following table presents income from operations of our Merchant Investment segment for the periods indicated:
Income before income taxes decreased $166 from $301 for the six months ended June 30, 2025 to $135 for the six months ended June 30, 2026. The following items contributed to the overall decrease:
The following table presents income from operations of our Corporate segment for the periods indicated:
Loss before income taxes increased $769,$265, or 587.0%,107.3%, from ($131)$247 for the three months ended MarchJune 31,30, 2025 to ($900)$512 for the three months ended MarchJune 31,30, 2026. The increase: was primarily due to a $258, or 61.7%, increase in Engineering, selling and administrative driven by higher stock-based compensationcompensation, discussedhigher above.salaries and wages and related benefits, and higher professional services fees.
The following table presents income from operations of our Corporate segment for the periods indicated:
Loss Before Income Taxes
Loss before income taxes increased $1,034, or 273.5%, from ($378) for the six months ended June 30, 2025 to ($1,412) for the six months ended June 30, 2026. The increase: was primarily due to a $1,034, or 143.2%, increase in Engineering, selling and administrative driven by higher stock-based compensation, higher salaries and wages and related benefits, and higher professional services fees.
As of MarchJune 31,30, 2026 and December 31, 2025, Cash and cash equivalents were $46,646$45.1 million and $41,514,$41.5 million, 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 provided by operating activities was $501$108 for the threesix months ended MarchJune 31,30, 2026 compared to $340$150 for the threesix months ended MarchJune 31,30, 2025, ana increasedecrease of $161,$42, primarily due to the following:
Investing Activities
Cash used in investing activities was $1,968 for the six months ended June 30, 2026 compared to $0 for the six months ended June 30, 2025, an increase of $1,968 primarily due to investment in the Skyline Note in June 2026.
Cash provided by financing activities was $4,631$5,781 for the threesix months ended MarchJune 31,30, 2026 compared to $0 for the threesix months ended MarchJune 31,30, 2025, an increase of $4,631,$5,781 primarily due to $4.6 million from the settlement of warrants in January 2026 and $1.2 million in capital contributions from non-controlling interests in Skyline SPV in June 2026.
As of MarchJune 31,30, 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.
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 Instruments May 2026, a Series of CGF2021 LLC ("Skyline SPV"), we hold a note receivable from Skyline Instruments Corporation ("Skyline") (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 based on the transaction price in the arm's-length financing in which it was issued, which we concluded represented its fair value at the date of issuance and as of June 30, 2026. 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. 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, we would estimate fair value using other unobservable inputs and valuation techniques, which could result in a materially different measurement. 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 our investment in Skyline SPV. As a result, changes in this estimate could have a material effect on our reported financial position and results of operations.
LGL insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-07-16 | Gabelli Mario J |
Option exercise | 572,324 | $6.90 | $3.9M |
| 2026-07-16 | Gabelli Mario J |
Option exercise | 621,928 | $6.90 | $4.3M |
| 2026-07-15 | Gabelli Marc |
Option exercise | 1,854,015 | $6.90 | $12.8M |
| 2026-07-15 | Gabelli Marc |
Option exercise | 1,477,660 | $6.90 | $10.2M |
| 2026-07-15 | Lamb Jason D |
Option exercise | 50,000 | $6.90 | $345.0K |
| 2026-07-15 | Huvane Patrick |
Option exercise | 1,000 | $6.90 | $6.9K |
| 2026-07-15 | Huvane Patrick |
Option exercise | 8,621 | $6.90 | $59.5K |
| 2025-03-25 | Kalha Manjit |
Grant/award | 2,308 | — | — |
Well-known investors holding LGL (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 169,494 | $1.2M | 0.0% | Added 2% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 25,367 | $175.3K | 0.0% | Added 25% |
| Millennium Management (Israel Englander) | 2026-06-30 | 14,319 | $98.9K | 0.0% | New position |