Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

As of August ~~2, 2021,~~8, 2022, the registrant had ~~5,272,204~~5,349,187 shares of common stock, $0.01 par value per share, outstanding.

Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, ~~2021~~2022

	June 30, 2021			December 31, 2020			June 30, 2022			December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	15,254		$	18,331		$	22,325		$	29,016
Marketable securities		5,993			5,791			19,177			16,167
Accounts receivable, net of allowances of $196 and $189, respectively		4,654			4,122
Accounts receivable, net of allowances of $212 and $208, respectively								4,711			4,667
Inventories, net		5,548			5,280			6,372			5,492
Prepaid expenses and other current assets		270			257			331			494
Total Current Assets		31,719			33,781			52,916			55,836
Property, plant and equipment:
Land		536			536			536			536
Buildings and improvements		4,822			4,810			4,877			4,869
Machinery and equipment		18,162			17,775			19,202			18,815
Gross property, plant and equipment		23,520			23,121			24,615			24,220
Less: accumulated depreciation		(20,568	)		(20,336	)		(21,150	)		(20,837	)
Net property, plant, and equipment		2,952			2,785			3,465			3,383
Right-of-use lease assets		362			422			332			396
Equity investment in unconsolidated subsidiary		5,045			3,072
Intangible assets, net		290			327			214			252
Deferred income taxes, net		2,996			3,052
Deferred income tax assets								499			34
Other assets		35			16			20			5
Total Assets	$	43,399		$	43,455		$	57,446		$	59,906
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		1,568			1,265			1,560			1,455
Accrued compensation and commissions		1,104			1,324			1,336			1,549
Income taxes payable								6			599
Other accrued expenses		610			808			545			823
Total Current Liabilities		3,282			3,397			3,447			4,426
Long-term lease liabilities		246			293
Deferred income tax liability								—			124
Other liabilities								632			613
Total Liabilities		3,528			3,690			4,079			5,163
Contingencies (Note N)
Stockholders’ Equity
Common stock, $0.01 par value - 10,000,000 shares authorized; 5,383,300 shares issued and 5,272,204 shares outstanding at June 30, 2021, and 5,409,550 shares issued and 5,272,204 shares outstanding at December 31, 2020		53			53
Common stock, $0.01 par value - 30,000,000 shares authorized; 5,472,054 shares issued and 5,334,187 shares outstanding at June 30, 2022, and 5,446,840 shares issued and 5,308,973 shares outstanding at December 31, 2021								53			53
Additional paid-in capital		45,574			45,477			46,070			45,817
Accumulated deficit		(5,176	)		(5,185	)
Treasury stock, 81,584 shares held in treasury at cost at June 30, 2021 and December 31, 2020		(580	)		(580	)
Retained earnings								7,824			9,453
Treasury stock, 81,584 shares held in treasury at cost at June 30, 2022 and December 31, 2021								(580	)		(580	)
Total Stockholders' Equity		39,871			39,765			53,367			54,743
Total Liabilities and Stockholders' Equity	$	43,399		$	43,455		$	57,446		$	59,906

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
REVENUES	$	6,882		$	7,059		$	13,418		$	15,677		$	7,434		$	6,882		$	15,542		$	13,418
Costs and expenses:
Manufacturing cost of sales		4,151			4,816			8,552			10,478			4,639			4,151			9,700			8,552
Engineering, selling and administrative		2,115			2,059			4,310			4,355			2,671			2,115			5,497			4,310
OPERATING INCOME		616			184			556			844			124			616			345			556
Other (expense) income:
Interest expense, net		(3	)		(4	)		(6	)		(4	)
Other income (expense):
Interest income (expense), net														7			(3	)		—			(6	)
Loss on equity investment in unconsolidated subsidiary		(676	)		(100	)		(752	)		(139	)		—			(676	)		—			(752	)
Other income (expense), net		70			232			242			(152	)
Total other (expense) income, net		(609	)		128			(516	)		(295	)
INCOME BEFORE INCOME TAXES		7			312			40			549
Income tax expense		25			57			31			111
Investment (loss) income														(2,373	)		75			(2,328	)		202
Other (expense) income, net														(8	)		(5	)		(24	)		40
Total other expense, net														(2,374	)		(609	)		(2,352	)		(516	)
(LOSS) INCOME BEFORE INCOME TAXES														(2,250	)		7			(2,007	)		40
Income tax (benefit) expense														(452	)		25			(378	)		31
NET (LOSS) INCOME	$	(18	)	$	255		$	9		$	438		$	(1,798	)	$	(18	)	$	(1,629	)	$	9
Basic per share information:															��
Weighted average shares outstanding		5,272,204			5,211,773			5,272,204			5,132,414			5,334,187			5,272,204			5,329,080			5,272,204
Net (loss) income	$	0.00		$	0.05		$	0.00		$	0.09		$	(0.34	)	$	(0.00	)	$	(0.31	)	$	0.00
Diluted per share information:
Weighted average shares outstanding		5,272,204			5,245,162			5,337,986			5,170,740			5,345,648			5,272,204			5,347,583			5,337,986
Net (loss) income	$	0.00		$	0.05		$	0.00		$	0.08		$	(0.34	)	$	(0.00	)	$	(0.30	)	$	0.00

																Shares of Common Stock Outstanding			Common Stock		Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Treasury Stock			Total
Balance at December 31, 2021																	5,308,973		$	53	$	45,817		$	9,453		$	(580	)	$	54,743
Net income, Q1 2022																	—			—		—			169			—			169
Stock-based compensation																	15,000			—		233			—			—			233
Balance at March 31, 2022																	5,323,973		$	53	$	46,050		$	9,622		$	(580	)	$	55,145
Net loss, Q2 2022																	—			—		—			(1,798	)		—			(1,798	)
Stock-based compensation																	15,000			—		70			—			—			70
Shares withheld to pay taxes																	(4,786	)		—		(50	)		—			—			(50	)
Balance at June 30, 2022																	5,334,187		$	53	$	46,070		$	7,824		$	(580	)	$	53,367
	Shares of Common Stock Outstanding		Common Stock		Additional Paid-In Capital		Accumulated Deficit			Treasury Stock			Total
Balance at December 31, 2020		5,272,204	$	53	$	45,477	$	(5,185	)	$	(580	)	$	39,765			5,272,204		$	53	$	45,477		$	(5,185	)	$	(580	)	$	39,765
Net income, Q1 2021		—		—		—		27			—			27			—			—		—			27			—			27
Stock-based compensation		—		—		78		—			—			78			—			—		78			—			—			78
Balance at March 31, 2021		5,272,204	$	53	$	45,555	$	(5,158	)	$	(580	)	$	39,870			5,272,204		$	53	$	45,555		$	(5,158	)	$	(580	)	$	39,870
Net loss, Q2 2021		—		—		—		(18	)		—			(18	)		—			—		—			(18	)		—			(18	)
Stock-based compensation		—		—		19		—			—			19			—			—		19			—			—			19
Balance at June 30, 2021		5,272,204	$	53	$	45,574	$	(5,176	)	$	(580	)	$	39,871			5,272,204		$	53	$	45,574		$	(5,176	)	$	(580	)	$	39,871

Balance at December 31, 2019		4,933,063	$	50	$	41,576	$	(6,153	)	$	(580	)	$	34,893
Net income, Q1 2020		—		—		—		183			—			183
Exercise of stock options		14,000		—		58		—			—			58
At-the-market stock sales, net of costs of $346		263,725		3		3,251		—			—			3,254
Stock-based compensation		—		—		10		—			—			10
Balance at March 31, 2020		5,210,788	$	53	$	44,895	$	(5,970	)	$	(580	)	$	38,398
Net income, Q2 2020		—		—		—		255			—			255
Exercise of stock options		1,266		—		5		—			—			5
Stock-based compensation		—		—		37		—			—			37
Balance at June 30, 2020		5,212,054	$	53	$	44,937	$	(5,715	)	$	(580	)	$	38,695

	Six Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2022			2021
OPERATING ACTIVITIES
Net income	$	9		$	438
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income							$	(1,629	)	$	9
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		233			224			313			233
Amortization of finite-lived intangible assets		38			37			38			38
Stock-based compensation		97			47			303			97
Loss from equity investment in unconsolidated subsidiary		752			139
Unrealized (gain) loss on marketable securities		(202	)		107
Deferred income tax expense		56			112
Loss on equity investment in unconsolidated subsidiary								—			752
Realized gain on sale of marketable securities								(112	)		—
Unrealized loss (gain) on marketable securities								2,441			(202	)
Deferred income taxes								(589	)		56
Changes in operating assets and liabilities:
Increase in accounts receivable, net		(532	)		(25	)		(44	)		(532	)
Increase in inventories, net		(268	)		(2	)		(880	)		(268	)
(Increase) decrease in prepaid expenses and other assets		(33	)		179
Decrease in accounts payable, accrued compensation and commissions and other		(102	)		(385	)
Net cash provided by operating activities		48			871
Decrease (increase) in prepaid expenses and other assets								168			(33	)
Decrease in accounts payable, accrued compensation, income taxes and commissions and other								(896	)		(102	)
Net cash (used in) provided by operating activities								(887	)		48
INVESTING ACTIVITIES
Subscription agreement funding (Note C)		(2,725	)		—			—			(2,725	)
Capital expenditures		(400	)		(105	)		(395	)		(400	)
Proceeds from sale of marketable securities								1,661			—
Purchase of marketable securities								(7,000	)		—
Net cash used in investing activities		(3,125	)		(105	)		(5,734	)		(3,125	)
FINANCING ACTIVITIES
Net proceeds from revolving credit agreement		—			103
Proceeds from at-the-market stock sales		—			3,254
Proceeds from stock option exercise		—			63
Net cash provided by financing activities		—			3,420
(Decrease) increase in cash and cash equivalents		(3,077	)		4,186
Payment for taxes related to net share settlement of equity awards								(50	)		—
Prepaid financing costs								(20	)		—
Net cash used in financing activities								(70	)		—
Decrease in cash and cash equivalents								(6,691	)		(3,077	)
Cash and cash equivalents at beginning of period		18,331			12,453			29,016			18,331
Cash and cash equivalents at end of period	$	15,254		$	16,639		$	22,325		$	15,254

Supplemental Disclosure:
Cash paid for income taxes	$	30		$	30
Income taxes paid							$	735		$	30

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and the instructions to Form 10-Q. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, ~~2021.~~2022. The information included in this Form 10-Q should be read in conjunction with the information included in The LGL Group, Inc. (the “Company”, “LGL Group”, “LGL”, “we”, “our” or “us”) Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the Securities and Exchange Commission (the “SEC”) on March ~~29, 2021.~~28, 2022.

The consolidated financial statements include the accounts of the Company and all of its majority-owned subsidiaries except its sole variable interest entity (“VIE”), LGL Systems Acquisition Holding Company, LLC (the “Sponsor”). ~~The VIE serves as the sponsor to a special purpose acquisition company.~~ Intercompany transactions and accounts have been eliminated in consolidation. The VIE served as the Sponsor to a special purpose acquisition company, LGL Systems Acquisition Corp. (the “SPAC” or “DFNS”). The SPAC completed a merger with its target company, IronNet Cybersecurity, Inc., on August 26, 2021 and changed its name to IronNet, Inc. (“IronNet” or “IRNT”) (the “IronNet Business Combination”). IronNet is a publicly-traded company on the NYSE American (“NYSE”) under the ticker symbol “IRNT.”

VIE: Our sole interest in a VIE, the Sponsor, iswas accounted for under the equity method of accounting and not consolidated. Determining whether to consolidate a VIE requires judgement in assessing whether an entity is a VIE and if we are the entity’s primary beneficiary. If we are the primary beneficiary of a VIE, we are required to consolidate ~~it.~~the entity. To determine if we are the primary beneficiary, we evaluate whether we have the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Our evaluation included identification of significant activities and an assessment of our ability to direct those activities, based on operating and other legal agreements as well as governance provisions. As a result of our review, we concluded that we ~~are~~were not the primary beneficiary of the VIE and that consolidation iswas not warranted.

The ~~Company reassesses its evaluation~~Sponsor is managed by LGL Systems Nevada Management Partners LLC (“Nevada GP”), an affiliated entity deemed to be under the significant influence of ~~whether an entity~~Marc Gabelli, the Company’s non-executive Chairman of the Board, who is also a ~~VIE when certain reconsideration events occur.~~greater than 10% stockholder of the Company. The Company ~~reassesses its determination of whether~~has determined that it is not the primary beneficiary of ~~a VIE on~~the Sponsor, as Nevada GP has the power to direct the activities of the Sponsor that most significantly impact the Sponsor’s economic performance through an ~~ongoing basis based on current facts and circumstances.~~operating agreement. The Company, therefore, accounts for the Sponsor under the equity method of accounting.

Equity-Method Investments: When the Company does not have a controlling financial interest in an entity but can exert significant influence over the entity’s operating and financial policies, the investment is accounted for either (i) under the equity method of accounting or (ii) at fair value by electing the fair value option available under GAAP. Significant influence generally exists when the Company owns 20% to 50% of the entity’s common stock or in-substance common stock.In applying the equity method, we record the investment at cost and subsequently increase or decrease the carrying amount of the investment by our proportionate share of earnings or losses of the investee. We record dividends or other equity distributions as reductions in the carrying value of the investment. Following the Sponsor’s September 2021 distribution of IRNT securities to the Company, as more fully described in Note C – Equity Investment in Unconsolidated Subsidiary, the Company’s remaining investment in the Sponsor is de minimis.

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

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

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

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

The Company’s two product groupings, Frequency Control and Spectrum Control, have identical characteristics for revenue recognition. Both are recognized upon shipment to the customer.

The Company provides disaggregated revenue details by segment in Note LK – Segment Information, and geographic markets in Note ML – Domestic and Foreign Revenues.

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

The Company periodically undertakes a review of its valuation allowance, and it evaluates all positive and negative factors that may affect whether it is more likely than not that the Company would realize its future tax benefits from its deferred tax balances.

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.

~~During the three and six months ended June 30, 2021, we~~We performed an assessment to determine if there were any indicators of impairment as a result of the operating conditions resulting from the coronavirus (“COVID-19”) ~~pandemic.~~pandemic at the end of the fiscal quarter ended June 30, 2022. 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. ~~While we do not anticipate any material impairment of our assets in the future as a result of COVID-19, future changes in our projected results could alter that view~~.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-13, “Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments,” which changes the impairment model for most financial assets. The standard replaces the incurred loss model with the current expected credit loss (“CECL”) model to estimate credit losses for financial assets. The provisions of the standard are effective for the Company on January 1, 2023; early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its financial statements.

OnIn November 6, 2019, the Company ~~invested $3.35 million~~made its initial investment of $3,350,000 in ~~LGL Systems Acquisition Holding Company, LLC, a partially owned subsidiary that serves as~~ the Sponsor of LGL Systems Acquisition Corp., (the “SPAC” or “DFNS”). The SPAC is a publicly-traded company on the New York Stock Exchange (“NYSE”) under the ticker symbol “DFNS” which was formed for the purpose of effecting a business combination in the aerospace, defense and communications industries. The Sponsor holds 100% of the SPAC’s Class B common shares, which are restricted and non-tradable, and 5,200,000 private warrants. The Sponsor purchased the private warrants in a private placement that closed simultaneously with the consummation of the SPAC’s initial public offering (“SPAC IPO”). Each private warrant is exercisable to purchase 1 share of common stock of the SPAC ~~at an exercise price of $11.50 per share. The Company contributed 62.2% of the Sponsor’s risk capital to effect the SPAC IPO.~~

The SPAC IPO closed on November 12, 2019; proceeds from the SPAC IPO totaled $172.5 million. If the SPAC does not complete a business combination within 24 months from the closing of the SPAC IPO, the proceeds from the sale of the private warrants will be used to fund the redemption of the shares sold in the SPAC IPO (subject to the requirements of applicable law); and ~~the private warrants will expire worthless. The Sponsor holds 20% of the total common shares (Class A and Class B) in the SPAC along with the 5,200,000 private warrants.~~

~~The Company also~~ subscribed to ~~a $2.725 million~~an additional investment ~~into the Sponsor~~of $2,725,000 in March 2021, which itwas funded in May 2021.The incremental investment ~~will be~~was part of the Sponsor syndication ~~of $5.66 million organized~~ to participate in a ~~$125 million~~ private placement ~~(“PIPE”) purchase of 12,500,000 shares of DFNS Class A common stock.~~

~~The PIPE is~~ in connection with the ~~recent announcement by DFNS~~IronNet Business Combination. As previously discussed, the SPAC completeda merger with its target company on August 26, 2021 and IronNet Cybersecurity, Inc. (“IronNet”) of the definitive business combination agreement reached between IronNet and DFNS. The PIPE and business combination are expected to close in the third quarter of 2021, after the required approval by the shareholders of DFNS and the fulfillment of certain other conditions. While the syndicated PIPE investment increases the Company’s commitment to the pro forma IronNet company, its position is not expected to be material to the pro forma capitalization. Upon completion of the business combination, which is subject to regulatory and other approvals, the combined company ~~will be renamed IronNet Cybersecurity, Inc. and will be listed~~began trading its common stock on the NYSE ~~and trade~~ under the ~~ticker~~ symbol ~~“IRNT”.~~“IRNT.”

~~The~~On September 14, 2021, as a result of its Sponsor investment, the Company received 1,572,529 shares of IRNT common stock and 2,065,000 IRNT warrants exchangeable into shares of IRNT common stock. On October 1, 2021, the Company exercised its 2,065,000 warrants on a cashless basis and received 1,271,406 shares of IRNT common stock. To date, the Company has disposed of 1,555,315 of its 2,843,935 shares of IRNT common stock and received related proceeds of approximately $20.2 million, with 1,288,620 shares of IRNT common stock remaining in our portfolio at June 30, 2022 valued at $2.8 million. Subsequent to the September 14, 2021 Sponsor distribution, the Company’s IRNT common stock and warrants were classified as marketable securities under ASC 321, Investments – Equity Securities (“ASC 321”), with any change in fair value reported as an unrealized gain or loss. See Note D - Marketable Securities. Subsequent to the September 14, 2021 Sponsor distribution, LGL’s interest in the Sponsor is ~~managed by LGL Systems Nevada Management Partners LLC (“Nevada GP”), an affiliated entity deemed to be under the significant influence of Marc Gabelli,~~immaterial.

D. ~~the Company’s non-executive Chairman of the Board, who is also a greater than 10% stockholder of the Company~~. Marketable Securities

The Company has determined that it is not the primary beneficiary of the Sponsor, as Nevada GP has the power to direct the activities of the Sponsor that most significantly impact the Sponsor’s economic performance through an operating agreement. The Company, therefore, accounts for equity securities under ASC 321. Such securities are reported at fair value on the ~~Sponsor under~~consolidated balance sheets, and the ~~equity method~~related unrealized gains and losses are reported in the consolidated statements of ~~accounting.~~ cash flows as non-cash adjustments to income. Any realized and unrealized gains or losses on investment securities are reported in the consolidated statements of operations as investment income or (loss). Investment loss was $2,373,000~~For~~ and investment income was $75,000 for the three months ended June 30, 2022 and 2021, respectively. Investment loss was $2,328,000 and investment income was $202,000 for the six months ended June 30, 2022 and 2021, ~~and 2020,~~respectively. During the six months ended June 30, 2022, the Company ~~recognized~~recorded realized gains on marketable securities of $112,000 related to a gain on the sale of 250,000 IRNT put options of $856,000, offset by a realized loss of $744,000 for the delivery of 50,000 shares of IRNT common stock against the related derivative position. There were 0 realized gains or losses for the prior year quarter or year-to-date period.

Details of marketable securities held at June 30, 2022 and December 31, 2021 are as follows (in thousands):

					Cumulative
					Unrealized
	Fair Value		Basis		(Loss) Gain
IronNet Securities:	June 30, 2022
1,288,620 shares of common stock	$	2,848	$	27,636	$	(24,788	)
		2,848		27,636		(24,788	)
Equity funds and other securities		16,330		16,808		(478	)
	$	19,178	$	44,444	$	(25,266	)

IronNet Securities:	December 31, 2021
1,338,620 shares of common stock	$	5,106	$	28,696	$	(23,590	)
Put options		1,245		489		756
		6,351		29,185		(22,834	)
Equity funds and other securities		9,816		9,808		8
	$	16,167	$	38,993	$	(22,826	)

The shares of IRNT common stock were received by the Company as a result of the previously discussed Sponsor distribution. The fair value of these shares determined at the date of distribution represents the basis of these securities.

At December 31, 2021, the Company held 1,250,000 shares of IRNT common stock that were restricted from sale until early 2022. The fair value of these shares of restricted common stock was determined by applying a discount for lack of marketability to the publicly quoted market price of IRNT common stock at December 31, 2021. At June 30, 2022, the sale restrictions were released and the fair value of our IRNT securitieswas determined based on ~~equity investment in unconsolidated subsidiary of $752,000 and $139,000, respectively.~~ their publicly quoted market price.

The Company ~~has recognized~~executed derivatives transactions as part of its plan to minimize the economic risk of IRNT share price volatility to its IRNT holdings. The Company held put options, covering shares of IRNT common stock with a ~~cumulative loss~~May 2022 expiration date, for 300,000 shares of ~~$1,030,000 on its investment in the unconsolidated Sponsor as of June 30, 2021~~.

On April 12, 2021, the SEC’s Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (the “Staff Statement”) was released. The SPAC evaluated the applicability and impact of the Staff Statement on its historical financial statements that have been filed with the SEC and determined that restatement was required. InIRNT common stock at December 31, 2021. During the first quarter of 2021, the SPAC changed its accounting treatment for both its public and private warrants outstanding using liability classification instead of equity classification resulting in a mark to market warrant liability adjustment for each reporting period since issuance in 2019. The Company reports its investment in the Sponsor under the equity method of accounting using hypothetical liquidation at book value (“HLBV”). HLBV determines the amount that would be received by2022, the Company ifdelivered 50,000 shares against its IRNT put options. On May 5, 2022, the ~~partnership were liquidated~~Company sold its remaining put options held at ~~book value at the end~~March 31, 2022 covering 250,000 shares of ~~each measurement period. The SPAC’s mark to market accounting adjustments~~IRNT common stock for the warrant liability does not change the Company’s HLBV due to the warrants requiring no cash settlement as of December 31, 2020 under a hypothetical liquidation; therefore, the SPAC’s restatement did not impact the Company’s carrying amount of its equity investment in the Sponsor.

Certain balances held and invested in various mutual funds are managed by a related entity (the "Fund Manager"). Marc Gabelli, ~~currently~~the Company’s non-executive Chairman of the Board, who is also a greater than 10% stockholder, serves as an executive officer of the Fund Manager. The brokerage and fund transactions in ~~2021~~2022 and ~~2020~~2021 were directed solely at the discretion of the Company’s management. See Note F – Fair Value Measurements for further discussion of the investments in mutual funds that are managed by the Fund Manager.

As of June 30, ~~2021~~2022, the balance with the Fund Manager totaled ~~$16,540,000,~~$22,131,000, including ~~$10,557,000~~$5,830,000 which is classified within cash and cash equivalents on the accompanying ~~unaudited~~ condensed consolidated balance sheets and ~~$5,983,000~~$16,301,000 which is classified within marketable securities on the accompanying ~~unaudited~~ condensed consolidated balance sheets. Amounts invested generated ($468,000) and $203,000 ~~and ($106,000)~~ of ~~realized and unrealized~~ investment (loss) income ~~(loss)~~ during the six months ended June 30, 2022 and 2021, ~~and 2020, respectively, that is included within other income (expense), net on the accompanying unaudited condensed consolidated statements of operations.~~respectively. Fund management fees are anticipated to average ~~less than 0.25%~~approximately 0.61% of the asset balances under management on an annual ~~basis.~~basis, as calculated by management using publicly available information for portfolio management fees.

As of December 31, ~~2020~~2021, the balance with the Fund Manager totaled ~~$19,062,000,~~$15,595,000, including ~~$13,282,000~~$5,823,000 which is classified within cash and cash equivalents on the accompanying ~~unaudited~~ condensed consolidated balance sheets and ~~$5,780,000~~$9,772,000 which is classified as marketable securities on the accompanying ~~unaudited~~ condensed consolidated balance sheets.

~~Marc Gabelli serves as Chairman and Co-Chief Executive Officer~~ Certain members of ~~the SPAC, has invested in the Sponsor and is the initial managing member of Nevada GP, the manager of the Sponsor. Timothy Foufas, a member of the Company’s~~our board of directors (the “Board”)~~, is also~~ including Marc Gabelli, John Mega, Timothy Foufas, Manjit Kalha and Michael Ferrantino, and two of our management team, Patrick Huvane and Michael Ferrantino, are members of the Sponsor. Robert LaPenta joined IronNet as a board member upon the IronNet Business Combination and was a member ~~and investor~~of our Board until his resignation on September 27, 2021. Mr. LaPenta remains a passive member of the ~~Sponsor,~~Sponsor. All except Mr. Kalha also served in various capacities of the SPAC but have all since resigned from the SPAC upon completion of the IronNet Business Combination on August 26, 2021. Prior to their resignations, John Mega was President of the SPAC, Timothy Foufas was Chief Operating Officer of the SPAC, ~~and is a member of Nevada GP.~~ Robert LaPenta ~~a member of the Board, is also a member and investor of the Sponsor,~~was Co-Chief Executive Officer and Chief Financial Officer of the SPAC, Mr. Gabelli was the Chairman and isCo-Chief Executive Officer of the SPAC, Michael Ferrantino was a SPAC board member and Patrick Huvane was a SPAC officer. Mr. Foufas, Mr. Huvane and Mr. Gabelli are managing members of ~~Nevada GP. John Mega,~~the Sponsor. Mr. Huvane became a managing member of the ~~Board, is also a member and investor of the~~ Sponsor and the President of the SPAC. Patrick Huvane, the Company’s Senior Vice President of Business Development, is a member of both the Company’s and the SPAC’s management team and an investor in the Sponsor. Mike J. Ferrantino, the Company’s ~~Chief Executive Officer, is also~~ a member of the Board, a member and investor of the Sponsor and a board member for the SPAC. Under separate arrangement, these people may be eligible to receive incentive compensation should the SPAC complete a successful acquisition.on September 27, 2021.

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

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to observable inputs such as quoted prices in active markets for identical assets or liabilities (Level 1) 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.

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

	Level 1		Level 2		Level 3		Total at June 30, 2021		Level 1		Level 2		Level 3		Total at June 30, 2022
Equity Security	$	10	$	—	$	—	$	10	$	2,876	$	—	$	—	$	2,876
Equity Mutual Fund		—		5,983		—		5,983	$	—	$	16,090	$	—	$	16,090
U.S. Treasury Mutual Fund		10,557		—		—		10,557
Commodity Mutual Fund									$	—	$	211	$	—	$	211
U.S. Treasury Mutual Funds									$	12,898	$	—	$	—	$	12,898

	Level 1		Level 2		Level 3		Total at December 31, 2020		Level 1		Level 2		Level 3		Total at December 31, 2021
Equity Security	$	11	$	—	$	—	$	11	$	416	$	4,734	$	—	$	5,150
Equity Mutual Fund		—		5,780		—		5,780	$	—	$	9,523	$	—	$	9,523
U.S. Treasury Mutual Fund		13,282		—		—		13,282
Commodity Mutual Fund									$	—	$	249	$	—	$	249
Derivative Contract Asset									$	1,245	$	—	$	—	$	1,245
U.S. Treasury Mutual Funds									$	12,889	$	—	$	—	$	12,889

There were no transfers from Level 3 during the periods presented. The Company also has assets that may be subject to measurement at fair value on a non-recurring basis, including goodwill and intangible assets and other long-lived assets. There were 0 liabilities subject to fair value on a non-recurring or recurring basis as of June 30, 2021 or December 31, 2020.

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had investments in 24 mutual funds. The Equity Mutual Fund noted above is invested in the Gabelli ABC Fund and the Commodity Mutual Fund was invested in the Gabelli Gold Fund. The U.S. Treasury Mutual ~~Fund is~~Funds, included in cash and cash equivalents, are invested in the Gabelli US Treasury Money Market Fund and the BlackRock Liquidity Treasury Trust Money Market Fund.

F.At December 31, 2021, the Company utilized a Level 2 category fair value measurement to value its investment in certain IronNet common stock holdings. Although IronNet common stock has a quoted price in active markets, a portion of the Company’s year-end IRNT holdings had sale restrictions requiring a discount for lack of marketability and classification as a Level 2 asset. The selling restriction on the restricted IRNT shares lapsed in the first quarter of 2022. The fair value of the IRNT shares without restrictions is determined based on the market price and included within the Level 1 category.

Inventories are valued at the lower of cost or net realizable value using the FIFO (first-in, first-out) method. The Company reduces the value of its inventories to net realizable value when the net realizable value is believed to be less than the cost of the item. The reserve for excess and obsolete inventory as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 was $~~1,341,000~~1,556,000 and ~~$1,219,000,~~$1,428,000, respectively.

	June 30, 2021		December 31, 2020		June 30, 2022		December 31, 2021
Raw materials	$	1,927	$	2,080	$	2,844	$	2,314
Work in process		2,775		2,467		2,657		2,196
Finished goods		846		733		871		982
Total Inventories, net	$	5,548	$	5,280	$	6,372	$	5,492

Intangible assets are recorded at cost less accumulated amortization which is included in engineering, selling and administrative expenses in the accompanying unaudited condensed consolidated statements of operations. Amortization is computed for financial reporting purposes using the straight-line method over the estimated useful lives of the assets, which range up to 10 years. The intangible assets consist of intellectual property and goodwill. The net carrying value of the amortizable intangible assets was ~~$250,000 and~~ ~~$287,000 as of June 30, 2021 and December 31, 2020, respectively. Goodwill, which is not amortizable, was $40,000 as of both June 30, 2021 and December 31, 2020.~~

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

In April 2022, 30,000 restricted shares were issued with a grant date fair value of $10.46 per share, 15,000 restricted shares vested, and 4,786 of the vested shares were withheld to pay taxes. Stock-based compensation expense was $70,000 and $303,000 for the three and six months ended June 30, 2022, respectively and $19,000 and $97,000 for the three and six months ended June 30, 2021, respectively. As of June 30, 2022 and December 31, ~~2020,~~2021, there was approximately ~~$415,000~~$475,000 and $435,000, respectively, of total unrecognized compensation expense related to unvested ~~share-based~~stock-based compensation arrangements, primarily related to restricted stock awards. ~~In March 2021, 26,250~~ ~~unvested restricted shares were forfeited; total unrecognized compensation expense amounted~~ ~~to $147,000~~ ~~at June 30, 2021.~~ This cost will be recognized over the weighted average remaining service period of these awards, ~~2.5~~which is 2 years for restricted stock and ~~1.3~~0.4 years for stock options.

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

For both the three and six months ended June 30, 2022 and 2021, there were warrants to purchase 1,051,664 shares of common stock and options to purchase 25,000 shares of common stock excluded from the diluted earnings per share computation. For both the three and six months ended June 30, 2020, there were options to purchase 25,000 shares of common stock excluded from the diluted earnings per share computation. The warrants and stock options were excludedcomputation because the impact of the assumed exercise of such warrants and stock options would have been anti-dilutive.

The following table reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding for the three and six months ended June 30, ~~2021~~2022 and ~~2020:~~2021:

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Weighted average shares outstanding - basic		5,272,204		5,211,773		5,272,204		5,132,414		5,334,187		5,272,204		5,329,080		5,272,204
Effect of diluted securities		0		33,389		65,782		38,326		11,461		0		18,503		65,782
Weighted average shares outstanding - diluted		5,272,204		5,245,162		5,337,986		5,170,740		5,345,648		5,272,204		5,347,583		5,337,986

On January 22, 2020, the Company entered into an Open Market Sales Agreement (the “Sales Agreement”) with Jefferies LLC, as sales agent (“Jefferies”), pursuant to which the Company may offer and sell, from time to time, in what is deemed to be an “at the market offering” (“ATM Offering”) through Jefferies, shares of the Company’s common stock, par value ~~$0.01~~ ~~per share, having an aggregate offering price of up to~~ ~~$15,000,000~~. Shares sold under the Sales Agreement are issued pursuant to the shelf registration statement on Form S-3 (File No. 333-235767), filed by the Company with the SEC on December 31, 2019, which was declared effective on January 8, 2020. The Company filed a prospectus supplement with the SEC on January 23, 2020 in connection with the offer and sale of the shares pursuant to the Sales Agreement. During February and March of 2020, ~~263,725~~ ~~shares were sold under the Sales Agreement, at an average price per share of $13.65, generating net proceeds of approximately $3,492,000, after brokerage charges of $108,000~~ were deducted and paid to Jefferies. Form S-3 and at-the-market registration costs were approximately $238,000 and were charged to additional paid-in capital. The Sales Agreement and ATM Offering remain in effect in accordance with their terms.

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 effective tax rate for the six months ended June 30, ~~2021~~2022 and June 30, ~~2020~~2021 was ~~77.5%~~18.9% and ~~20.2%~~77.5%, respectively. The effective tax rate for the three months ended June 30, 2022 and June 30, 2021 was 20.1% and 357.1%, respectively. Differences between the Company’s effective income tax rate and the U.S. federal statutory rate are primarily the impact of ~~state taxes, foreign taxes, non-deductible expenses, excess tax benefits or expense on share-based compensation and~~ research and development credits, the mix of earnings between jurisdictions, and state taxes.

On June 15, 2022, M-Tron Industries, Inc. and Piezo Technology, Inc. (collectively, the “Borrowers”), both operating subsidiaries of The LGL Group, Inc. (the “Company”), entered into a loan agreement for a revolving line of credit with Fifth Third Bank, National Association, an unaffiliated entity, as the lender (“Lender”), for up to $5.0 million (the “Loan Agreement”), such amount to be used for working capital and general operations. The Loan Agreement is evidenced by a promissory note dated June 15, 2022 that matures on June 15, 2025 (the “Note”), and two corresponding security agreements (the “Security Agreements”). The Note bears interest at the Secured Overnight Financing Rate (SOFR) one-month rate plus 2.25%, with a SOFR floor of 0.0%. Accrued interest-only payments are due on a monthly basis until the maturity date. The Borrowers may prepay all or any portion of the loans under the Loan Agreement at any time, without fee, premium or penalty.

The Loan Agreement contains various affirmative and negative covenants that are customary for lines of credit and transactions of this type, including limitations on the incurrence of debt and liabilities by the Borrowers, as well as financial reporting requirements. The Loan Agreement also imposes certain financial covenants based on the following criteria, which are specifically defined in the Loan Agreement: (a) Minimum Fixed Charge Coverage Ratio; (b) Minimum Current Ratio; and (c) Minimum Tangible Net Worth. At June 30, 2022, the Company had 0 borrowings outstanding under its revolving line of credit with Fifth Third Bank.

The Company has 2 reportable business ~~segments,~~segments; electronic components (MtronPTI), and electronic ~~instruments.~~instruments (PTF). The electronic components segment is focused on the design, manufacture and marketing of highly-engineered, high reliability frequency and spectrum control products. These electronic components ensure reliability and security in aerospace and defense communications, low noise and base accuracy for laboratory instruments, and synchronous data transfers throughout the wireless and Internet infrastructure. The electronic instruments segment is focused on the design and manufacture of high performance Frequency and Time Reference Standards that form the basis for timing and synchronization in various applications.

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Revenues from Operations
Revenues
Electronic components	$	6,407		$	6,769		$	12,661		$	15,045		$	7,064		$	6,407		$	14,755		$	12,661
Electronic instruments		475			290			757			632			370			475			787			757
Total consolidated revenues	$	6,882		$	7,059		$	13,418		$	15,677		$	7,434		$	6,882		$	15,542		$	13,418
Operating Income
Operating Income (Loss)
Electronic components	$	834		$	314		$	1,183		$	1,185		$	711		$	834		$	1,765		$	1,183
Electronic instruments		102			37			118			74			(22	)		102			(14	)		118
Unallocated corporate expense		(320	)		(167	)		(745	)		(415	)		(565	)		(320	)		(1,406	)		(745	)
Total operating income		616			184			556			844			124			616			345			556
Interest expense, net		(3	)		(4	)		(6	)		(4	)
Interest income (expense), net														7			(3	)		—			(6	)
Loss on equity investment in unconsolidated subsidiary		(676	)		(100	)		(752	)		(139	)		—			(676	)		—			(752	)
Other income (expense), net		70			232			242			(152	)
Total other (expense) income		(609	)		128			(516	)		(295	)
Income Before Income Taxes	$	7		$	312		$	40		$	549
Investment (loss) income														(2,373	)		75			(2,328	)		202
Other (expense) income, net														(8	)		(5	)		(24	)		40
Total other expense, net														(2,374	)		(609	)		(2,352	)		(516	)
(Loss) Income Before Income Taxes													$	(2,250	)	$	7		$	(2,007	)	$	40

Operating income is equal to revenues less cost of sales and operating expenses ~~excluding investment income, interest expense, loss on equity investment~~(engineering, selling and ~~income taxes.~~administrative expenses).

Significant foreign revenues from operations (10% or more of foreign sales) follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Malaysia	$	433	$	563	$	1,042	$	1,581	$	1,231	$	433	$	2,524	$	1,042
Hong Kong		166		365		355		611		139		166		376		355
Germany		204		103		286		293		90		204		242		286
Australia		189		332		189		493		5		189		5		189
All other foreign countries		405		644		873		1,115		460		405		1,174		873
Total foreign revenues	$	1,397	$	2,007	$	2,745	$	4,093	$	1,925	$	1,397	$	4,321	$	2,745
Total domestic revenue	$	5,485	$	5,052	$	10,673	$	11,584	$	5,509	$	5,485	$	11,221	$	10,673

The Company allocates its foreign revenue based on the customer's ship-to location.

In the ordinary course of business, the Company and its subsidiaries may become defendants in certain product liability, patent infringement, worker claims and other litigation. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable.

In late 2021, the Company’s Board approved progressing with the Spin-Off (as defined below) of M-tron Industries, Inc. (together with its subsidiaries, “MtronPTI”) which is currently a wholly-owned subsidiary of the Company. On May 11, 2022, the Company filed a Definitive Proxy Statement with the SEC indicating its intention to secure stockholder approval of the transaction. At the special meeting of stockholders on June 21, 2022, the Company’s stockholders approved the Spin-Off. The Spin-Off will separate the business activities and investments of the Company and create two separate, publicly-traded companies: (1) the Company, which will continue to own and operate Precise Time and Frequency, LLC and hold substantially all the Company’s cash and marketable securities, and (2) MtronPTI, which includes the operations of Piezo Technology, Inc. and M-tron Asia, LLC (the “Spin-Off”).

The Spin-Off was approved by the Company’s Board on August 3, 2022 and is expected to be effected through a pro rata issuance of shares of MtronPTI’s common stock to the Company’s stockholders structured as a tax-free distribution. Stockholders of the Company ~~leases certain manufacturing and office space and equipment.~~will receive 1 share of MtronPTI’s common stock for each share of the Company’s common stock held of record as of the close of business on the record date for the distribution. As a result, the Company’s stockholders as of the record date for the Spin-Off will also become the stockholders of MtronPTI after the Spin-Off. The Company ~~determines~~will cease to have any ownership interest in MtronPTI following the Spin-Off, but the Company’s stockholders will, unless they sell their shares, be the stockholders of both the Company and MtronPTI.

Management believes that, if completed, the potential Spin-Off of MtronPTI would enable stockholders to more clearly evaluate the performance and future potential of each entity on a standalone basis, while allowing each entity to pursue its own distinct business strategy and capital allocation policy. Separating MtronPTI as an ~~arrangement~~independent, publicly-owned company positions both MtronPTI and LGL Group to create value for their respective stockholders. The Spin-Off would permit each company to tailor its strategic plans and growth opportunities, more efficiently raise and allocate resources, including capital raised through debt or equity offerings, provide flexibility to use its own stock as currency for incentive compensation and potential acquisitions and provide investors a more targeted investment opportunity.

If the Spin-Off transaction is consummated, the Company anticipates reporting MtronPTI as a ~~lease~~discontinued operation for all periods following the distribution date. The Company’s Board may, in its sole and absolute discretion, withdraw its authorization and approval of the Spin-Off and cause the Company to abandon the Spin-Off at ~~inception. A contract is, or contains, a lease if~~any time prior to its consummation. Therefore, there can be no assurance that the contract conveys the right to control the use of identified property, plant or equipment (an identified asset) for a period of time in exchange for consideration. Amounts associated with operating leases, which are not short-term, are included in right-of-use lease assets, and other accrued expenses and long-term lease liabilitiespotential Spin-Off transaction will be completed in the Company’s condensed consolidated balance sheet. Right-of-use lease assets represents the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use lease assets and liabilities are recognizedmanner described above, or at the lease commencement date based on the estimated present value of lease payments over the expected lease term. The Company uses its incremental borrowing rate at the lease commencement date in determining the present value of lease payments. Short-term leases with an initial term of 12 months or less are not recorded in the Company’s condensed consolidated balance sheets; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The Company leases certain property under operating leases with terms that range from one to five years. Certain of these leases have one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or more, and the exercise of lease renewal options under these leases is at our sole discretion. Our lease agreements do not contain any material residual value guarantees or material restrictive~~covenants.~~

~~Future minimum lease payment obligations under operating leases at June 30, 2021 are as follows (in thousands):~~

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, ~~2020.~~2021. The terms ~~“we,” “us,” “our,” and~~ the “Company”, “LGL Group”,“LGL”, “we”, “our” or “us” refer to The LGL Group, Inc. and unless otherwise defined herein, capitalized terms used herein shall have the same meanings as set forth in our condensed consolidated financial statements and the notes thereto.

Certain statements contained in this Quarterly Report on Form 10-Q of the Company and the Company's other communications and statements, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends for all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable by law. Such statements include, in particular, statements about the Company's beliefs, plans, objectives, goals, expectations, estimates, projections and intentions. These statements are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond the Company's control. The words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan," "target," ~~"goal,"~~"goal" and similar expressions are intended to identify forward-looking statements. All forward-looking statements, by their nature, are subject to risks and uncertainties. Therefore, such statements are not intended to be a guarantee of the Company's performance in future periods. The Company's actual future results may differ materially from those set forth in the Company's forward-looking statements. For information concerning these factors and related matters, see "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, filed with the SEC on March ~~29, 2021,~~28, 2022, this Quarterly Report on Form 10-Q and our other filings with the SEC. However, other factors besides those referenced could adversely affect the Company's results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statements made by the Company herein speak as of the date of this Quarterly Report on Form 10-Q. The Company does not undertake to update any forward-looking statement, except as required by law. As a result, you should not place undue reliance on these forward-looking statements.

The Company is a diversified holding company with subsidiaries engaged in the designing, manufacturing and marketing of highly-engineered, high reliability frequency and spectrum control products used to control the frequency or timing of signals in electronic circuits, and in the design of high performance Frequency and Time Reference Standards that form the basis for timing and synchronization in various applications. The Company’s primary markets are aerospace and defense.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all of its majority-owned subsidiaries except its sole variable interest entity (“VIE”), LGL Systems Acquisition Holding Company, LLC (the “Sponsor”). The VIE served as the sponsor to a special purpose acquisition company, LGL Systems Acquisition Corp. (the “SPAC” or “DFNS”). The SPAC completed a merger with its target company, IronNet Cybersecurity, Inc., on August 26, 2021 and changed its name to IronNet, Inc. (“IronNet” or “IRNT”) (the “IronNet Business Combination”). IronNet is a publicly-traded company on the NYSE American (“NYSE”) under the ticker symbol “IRNT.”

In November 2019, the Company made its initial investment of $3,350,000 in the Sponsor of the SPAC and subscribed to an additional investment of $2,725,000 in March 2021 which was funded in May 2021. The incremental investment was part of the Sponsor syndication to participate in a private placement in connection with the IronNet Business Combination. On September 14, 2021, as a result of its Sponsor investment, the Company received 1,572,529 shares of IRNT common stock and 2,065,000 IRNT warrants exchangeable into shares of IRNT common stock, representing an aggregate fair value of $65.3 million. While LGL continues to hold an interest in the Sponsor, it is immaterial. Subsequent to the September 14, 2021 Sponsor distribution, the Company’s IRNT securities have been classified as marketable securities under ASC 321, Investments – Equity Securities (“ASC 321”), with the change in fair value from the date of distribution reported as gain or loss.

As of June 30, 2022, our order backlog was $43,384,000, an increase of 45.6% from $29,797,000 at December 31, 2021 and an increase of 103.2% compared to the backlog of $21,347,000 as of June 30, 2021. Backlog included $43,233,000 and $29,439,000 for our electronic components (MtronPTI) segment and $151,000 and $358,000 for our electronic instruments segment as of June 30, 2022, and December 31, 2021, respectively. The Company attained record backlog levels as of June 30, 2022. Quarterly bookings

were $13,827,000 for the second quarter of 2022, $15,302,000 for the first quarter of 2022 and $15,169,000 for the fourth quarter of 2021. This record booking trend during the last three quarters reflects improved orders from the continued recovery of the avionics market along with strong defense orders, as we continue to pull in orders from our customers for 2023 and beyond, much of which is expected to ship subsequent to 2022. Supply chain constraints within our industry have pushed our customers to order well in advance to secure product deliveries for their production requirements. The backlog of unfilled orders includes amounts based on signed contracts as well as agreed letters of intent which we have determined are firm orders likely to be fulfilled largely in the next 12 months but can extend past two years. Order backlog is adjusted quarterly to reflect project cancellations, deferrals, revised project scope and cost, and sales of subsidiaries, if any.

Total revenues were $7,434,000 for the three months ended June 30, 2022, or 8.0% above revenues of $6,882,000 for the three months ended June 30, 2021. The revenue increase reflects the recovering avionics market and strong defense product shipments.

Consolidated gross margin, which is consolidated revenues less manufacturing cost of sales as a percentage of revenues, decreased to 37.6% for the three months ended June 30, 2022, from 39.7% for the three months ended June 30, 2021 reflecting the effects of inflation and product mix.

The Company reported operating income of $124,000 for the three months ended June 30, 2022, compared to $616,000 for the three months ended June 30, 2021. The decrease reflects higher revenue with lower margins partly offset by inflationary pressures, and negatively impacted by $51,000 of increased stock compensation expense and $232,000 of Spin-Off costs (as defined below) in the second quarter of 2022.

The Company recognized a loss on equity investment in unconsolidated subsidiary of $676,000 for the three months ended June 30, 2021. Subsequent to the September 14, 2021 Sponsor distribution, the Company’s investment in the Sponsor is immaterial and the IRNT securities have been classified as marketable securities with the change in fair value from the date of distribution reported as investment income or loss on marketable securities.

The Company reported $2,373,000 of investment loss during the three months ended June 30, 2022 compared to investment income of $75,000 during the three months ended June 30, 2021. The loss during the three months ended June 30, 2022 was related to a $1,872,000 net loss (realized and unrealized) related to IRNT securities with the remaining loss of $501,000 caused by the non-IRNT related investment performance. Investment gains and losses have caused and are expected to continue to cause significant volatility in our earnings, particularly with respect to our IronNet securities.

Other expense, net was $8,000 for the three months ended June 30, 2022, compared to $5,000 for the three months ended June 30, 2021 reflecting the impact of unfavorable currency changes.

We recorded a tax benefit of $452,000 and expense of $25,000 for the three months ended June 30, 2022 and 2021, respectively. The (benefit) expense is based on an estimated annual effective tax rate across the jurisdictions in which we operate.

Net loss was $1,798,000 compared to $18,000 for the three months ended June 30, 2021.The increase in net loss was primarily from the previously discussed investment loss offset by business operations described above. Diluted net loss per share for the three months ended June 30, 2022 and 2021 was $0.34 and $0.00, respectively.

Total revenues were $15,542,000 for the six months ended June 30, 2022, or 15.8% above revenues of $13,418,000 for the six months ended June 30, 2021. The revenue increase reflects the recovering avionics market and strong defense product shipments.

Consolidated gross margin, which is consolidated revenues less manufacturing cost of sales as a percentage of revenues, improved to 37.6% for the six months ended June 30, 2022 from 36.3% for the six months ended June 30, 2021 reflecting the increased business volume.

The Company reported operating income of $345,000 for the six months ended June 30, 2022 compared to $556,000 for the six months ended June 30, 2021. The decrease reflects higher revenue and margins partly offset by inflationary pressures, and negatively impacted by $206,000 of increased stock compensation expense and $343,000 of Spin-Off costs (as defined below) in the first six months of 2022.

The Company recognized a loss on equity investment in unconsolidated subsidiary of $752,000 for the six months ended June 30, 2021. Subsequent to the September 14, 2021 Sponsor distribution, the Company’s investment in the Sponsor is immaterial and the IRNT securities have been classified as marketable securities with the change in fair value from the date of distribution reported as investment income or loss on marketable securities.

The Company reported $2,328,000 of investment loss compared to income of $202,000 during the six months ended June 30, 2021. The investment loss for the six months ended June 30, 2022 was primarily related to IRNT related investment losses of $1,841,000 (realized and unrealized) and included unrealized investment losses of $487,000 from the remainder of the portfolio. Investment gains and losses have caused and are expected to continue to cause significant volatility in our earnings, particularly with respect to our IronNet securities.

Other (expense) income, net was expense of $24,000 compared to income of 40,000 for the six months ended June 30, 2021 reflecting the impact of unfavorable currency changes.

We recorded a tax benefit of $378,000 and expense of $31,000 for the six months ended June 30, 2022 and 2021, respectively. The (benefit) expense is based on an estimated annual effective tax rate across the jurisdictions in which we operate.

Net loss was $1,629,000, compared to income of $9,000 for the six months ended June 30, 2021.The decrease was primarily from the previously discussed investment loss which was offset by increased business volume partly offset by one-time Spin-Off costs. Diluted net (loss) income per share for the six months ended June 30, 2022 and 2021 was a loss of $0.30 and income of $0.00, respectively.

As of June 30, 2022 and December 31, 2021, cash and cash equivalents were $22,325,000 and $29,016,000, respectively. For the six months ended June 30, 2022, the Company utilized $5,339,000 for investment activities related to marketable securities, including $7,000,000 for purchases of securities offset by security sales of $1,661,000.

Cash (used in) provided by operating activities for the six months ended June 30, 2022 and 2021 was $887,000 used in and $48,000, provided by operating activities, respectively. The $1,005,000 decrease was primarily from reduced income taxes payable due to timing of payments, higher inventory levels in support of business growth as well as advanced procurement of certain inventory components to address supply chain issues, offset by reduced accounts receivable and prepaid balances.

Cash used in investing activities for the six months ended June 30, 2022 and 2021 was $5,734,000 and $3,125,000, respectively. The $2,609,000 increase reflects the purchase of $7,000,000 of marketable securities and proceeds from the sale of IRNT shares and related derivatives of $1,661,000 during the six months ended June 30, 2022. Capital expenditures of $395,000 during the six months ended June 30, 2022 were for investment in production equipment to improve cost and efficiency, in line with the prior year capital expenditures of $400,000.

Cash used in financing activities of $70,000 for the six months ended June 30, 2022 includes $50,000 as the result of vested restricted shares being withheld to pay the related payroll taxes, and $20,000 for prepaid financing costs.

As of June 30, 2022, our consolidated working capital was $49,469,000 compared to $51,410,000 as of December 31, 2021. As of June 30, 2022, we had current assets of $52,916,000, current liabilities of $3,447,000 and a ratio of current assets to current liabilities of 15.35 to 1.00. As of December 31, 2021, we had current assets of $55,836,000, current liabilities of $4,426,000 and a ratio of current assets to current liabilities of 12.62 to 1.00. 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.

The Company’s MtronPTI subsidiary has a loan agreement for a revolving line of credit with Fifth Third Bank N.A. for up to $5,000,000 bearing interest at the Secured Overnight Financing Rate (SOFR) one-month rate plus 2.25%, with a SOFR floor of 0.00%. The loan agreement has a maturity date of June 15, 2025 and contains certain financial covenants based on the following criteria: (a) Minimum Fixed Charge Coverage Ratio; (b) Minimum Current Ratio; and (c) Minimum Tangible Net Worth (each as

defined in the loan agreement). Borrowings under the loan agreement are secured by all of the property of two of the Company’s subsidiaries, M-tron Industries, Inc. and Piezo Technology, Inc. At June 30, 2022, the Company had no borrowings outstanding under its revolving line of credit with Fifth Third Bank.

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.

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.

In late 2021, the Company’s Board approved progressing with the Spin-Off (as defined below) of MtronPTI. On May 11, 2022, the Company filed a Definitive Proxy Statement with the SEC indicating its intention to secure stockholder approval of the transaction. At the special meeting of stockholders on June 21, 2022, the Company’s stockholders approved the Spin-Off. The Spin-Off will separate the business activities and investments of the Company and create two separate, publicly-traded companies: (1) the Company, which will continue to own and operate Precise Time and Frequency, LLC and hold substantially all the Company’s cash and marketable securities, and (2) MtronPTI, which includes the operations of Piezo Technology, Inc. and M-tron Asia, LLC (the “Spin-Off”). If completed, upon the distribution of the MtronPTI shares, LGL stockholders would own shares of both companies.

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

See Note O - Spin-Off in the accompanying notes to condensed consolidated financial statements for further details of the transaction.

Our accompanying condensed consolidated financial statements are prepared in conformity with 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, 2021.

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 below and those listed in Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, ~~2020. However, due to the COVID-19 pandemic in the U.S. and globally, our business and operations have been impacted and may be further impacted, as further discussed below.~~2021.

The ~~global outbreak~~COVID-19 pandemic (“COVID”) has had and may continue to have an adverse impact on our operations and financial performance, as well as on the operations and financial performance of ~~COVID-19 was declared a~~many of the customers and suppliers in industries that we serve. The COVID pandemic ~~by the World Health Organization~~continues to present business challenges, and ~~a national emergency by the U.S. government~~we continue to experience impacts related to COVID, primarily in ~~March 2020 and has negatively impacted the U.S. and global economy, disrupted~~higher raw material prices, disruptions in global supply chains, ~~resulted~~delays in ~~significant~~supplier deliveries, delays in deliveries to customers, travel restrictions, quarantine restrictions, labor shortages and ~~transport restrictions, including mandated closures and orders to “shelter-in-place,” and created significant disruption of the financial markets.~~employee absences.

As a result of ~~the COVID-19 pandemic,~~COVID, the Company’s operations in India were closed on March 23, 2020 and resumed limited operations on May 7, 2020 with a reduced level of staffing. By the end of June 2020, the Company’s India facilities were fully ~~operational; however, the recent India COVID-19 surge does present a potential risk.~~operational. ~~Post COVID-19~~Post-COVID revenue and bookings ~~declined;~~declined, and ~~cost saving~~cost-saving measures were taken. ~~Despite the decline in revenue and bookings associated with the foregoing suspension of operations in India and other COVID-19 impacts on our business, the~~ ~~Company does not anticipate COVID-19 having a significant ongoing impact on the Company’s future results~~. However, the ultimate effect on our future results could be significant and will largely depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19, the success of actions taken to contain or treat COVID-19 and its variants including the

~~widespread availability and use of effective vaccines, and reactions by consumers, companies, governmental entities and capital markets~~.

In accordance with the Department of Defense ~~(“DoD”)~~ guidance issued in March 2020 designating the Defense Industrial Base as a critical infrastructure workforce, our U.S. production facilities have continued to operate in support of essential products and services required to meet national security commitments to the U.S. Government and the U.S. military; however, facility closures or work slowdowns or temporary stoppages have occurred and could occur in the future. In addition, other countries have different practices and policies that can affect our international operations and the operations of our suppliers and customers. In some cases, our facilities are not operating under full staffing as a result of COVID-19. Customer visits and representative training are being impacted by travel restrictions as a result of COVID-19, which could delay new design wins and future business with our customers.

The Company has taken measures to protect the health and safety of our employees, work with our customers to minimize potential disruptions and support our community in addressing the challenges posed by this global pandemic. The extent of the impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute our contracts in the expected timeframe, will depend on future developments, including the duration and spread of the pandemic and related actions taken by the U.S. Government, state and local government officials and international governments to prevent disease spread, all of which are uncertain and cannot be predicted.

An extended period of global supply chain disruption caused by the response to COVID-19 could impact our ability to perform on our contracts. To date, we have identified a number of suppliers that have potential delivery impacts due to COVID-19 and, if we are not able to implement alternatives or other mitigations, contract deliveries could be adversely impacted.

Delays in inspection, acceptance and payment by our customers, many of whom are teleworking, could also affect our sales and cash flows. This is particularly an issue with respect to classified work that is unable to be done remotely. Limitations on government operations can also impact regulatory approvals such as export licenses that are needed for international sales and deliveries. In addition, we could experience delays in new contract starts or awards of future work as well as the uncertain impact of contract modifications to respond to the national emergency. Government funding priorities may change as a result of the costs of the COVID-19 pandemic. If significant portions of our workforce are unable to work effectively, including because of illness, quarantines, absenteeism, government actions, facility closures, travel restrictions or other restrictions in connection with the COVID-19 pandemic, our operations will be impacted. We may be unable to perform fully on our contracts and our costs may increase as a result of the COVID-19 outbreak. These cost increases, including costs for employees whose jobs cannot be performed remotely, may not be fully recoverable under our contracts, or adequately covered by insurance. The impact of COVID-19 could worsen if there is an extended duration of any COVID-19 outbreak or a resurgence of COVID-19 infection in affected regions after they have begun to experience improvement.

COVID-19 has also led to disruption and volatility in the global capital markets, which depending on future developments could impact our capital resources and liquidity in the future. COVID-19 has also caused volatility in the equity capital markets. We are monitoring the impacts of COVID-19 on the fair value of our assets. While we do not currently anticipate any material impairments on our assets as a result of COVID-19, future changes in expectations for sales, earnings and cash flows related to intangible assets and goodwill below our current projections could cause these assets to be impaired. While these are our current assumptions, this is an emerging situation and these could change, which could affect our outlook.

~~As of June 30, 2021, our order backlog was~~ ~~$21,347,000, an~~ ~~increase of 7.8% from $19,801,000 at December 31, 2020 and a decrease~~ ~~of 5.1%~~ ~~compared to the backlog~~ ~~of $22,496,000~~ ~~as of June 30, 2020.~~ ~~Quarterly bookings of $7,841,000 for the second quarter 2021 increased 12.0%above 2020 levels.~~ ~~Bookings have~~ shown sequential improvement, from $7,123,000 last quarter and $5,759,000 in the fourth quarter of 2020, but remain substantially below pre-COVID-19 levels. Improvement in new avionics bookings started last quarter, but deliveries are not being scheduled until early next year; quarterly space market orders also trended upward during 2021.

~~The backlog of unfilled orders includes amounts based on signed contracts as well as agreed letters of intent which we have determined are firm orders likely to be fulfilled in the next 12 months.~~

Order backlog is adjusted quarterly to reflect project cancellations, deferrals, revised project scope and cost, and sales of subsidiaries, if any. We expect to fill substantially all of our order backlog within the next twelve months but cannot provide assurances as to what portion of the order backlog will be fulfilled in a given year.

On November 6, 2019, the Company invested $3.35 million in LGL Systems Acquisition Holding Company, LLC, a partially owned subsidiary that serves as the Sponsor of LGL Systems Acquisition Corp., (the “SPAC” or “DFNS”). The SPAC is a publicly-traded company on the NYSE under the ticker symbol “DFNS” which was formed for the purpose of effecting a business combination in the aerospace, defense and communications industries. The Sponsor holds 100% of the SPAC’s Class B common shares, which are restricted and non-tradable, and 5,200,000 private warrants. The Sponsor purchased the private warrants in a private placement that closed simultaneously with the consummation of the SPAC’s initial public offering (“SPAC IPO”). Each private warrant is exercisable to purchase one share of common stock of the SPAC at an exercise price of $11.50 per share. The Company contributed 62.2% of the Sponsor’s risk capital to effect the SPAC IPO and holds a 43.57% membership interest in the Sponsor.

The ~~SPAC IPO closed~~ultimate impact of COVID on ~~November 12, 2019; proceeds from the SPAC IPO totaled $172.5 million. If the SPAC does~~our operations and financial performance depends on many factors that are not ~~complete a business combination~~ within ~~24 months from the closing~~our control, including, but not limited to, duration of the ~~SPAC IPO,~~pandemic, potential subsequent waves of COVID infection or potential new variants, the ~~proceeds from the sale~~effectiveness and adoption of ~~the private warrants will be used to fund the redemption of the shares sold in the SPAC IPO (subject to the requirements of applicable law);~~COVID vaccines and ~~the private warrants will expire worthless. The Sponsor holds 20% of the total common shares (Class A~~therapeutics, governmental, business and ~~Class B) in the SPAC along with the 5,200,000 private warrants.~~

~~The Company also subscribed to a $2.725 million investment into the Sponsor in March 2021, which it~~ funded in May 2021. The investment will be part of the Sponsor syndication of $5.66 million organized to participate in a $125 million private placement (“PIPE”) purchase of 12,500,000 shares of DFNS Class A common stock.

~~The PIPE is in connection with the recent announcement by DFNS~~individuals’ actions that have been and IronNet Cybersecurity, Inc. (“IronNet”) of the definitive business combination agreement reached between IronNet and DFNS. The PIPE and business combination are expected to close in the third quarter of 2021, after the required approval by the shareholders of DFNS and the fulfillment of certain other conditions. While the syndicated PIPE investment increases the Company’s commitment to the pro forma IronNet company, its position is not expectedcontinue to be material to the pro forma capitalization. Upon completion of the business combination, which is subject to regulatory and other approvals, the combined company will be renamed IronNet Cybersecurity, Inc. and will be listed on the NYSE and trade under the ticker symbol “IRNT”.

~~The Sponsor is managed by LGL Systems Nevada Management Partners LLC (“Nevada GP”), an affiliated entity deemed to be under the significant influence of Marc Gabelli,~~ ~~the Company’s non-executive Chairman of the Board, who is also a greater than 10% stockholder of the Company~~. The Company has determined that it is not the primary beneficiary of the Sponsor, as Nevada GP has the power to direct the activities of the Sponsor that most significantly impact the Sponsor’s economic performance through an operating agreement. The Company, therefore, accounts for the Sponsor under the equity method of accounting. For the six months ended June 30, 2021 and 2020, the Company recognized a loss on equity investment in unconsolidated subsidiary of $752,000 and $139,000, respectively. The increase represents legal and other costs related to the planned third quarter DFNS and IronNet business combination. The Company has recognized a cumulative loss of $1,030,000 on its investment in the unconsolidated Sponsor as of June 30, 2021.

~~Three months ended June 30, 2021 compared to three months ended June 30, 2020~~

~~Total revenues~~ ~~were $6,882,000, or 2.5% below revenues of~~ ~~$7,059,000 for the three months ended June 30, 2020. The decline in shipments to the avionics market was mostly offset by strong space business performance.~~

Consolidated gross margin, which is consolidated revenues less manufacturing cost of sales as a percentage of revenues, improved to 39.7% from 31.8% for the three months ended June 30, 2020. Margin improvement was from favorable product mix and cost reductions including the elimination of certain previously required redundancies to preserve manufacturing capabilitiestaken in response to the ~~COVID-19 impacts~~pandemic (including shutdown orders, border closings, restrictions on travel and transport and workplace restrictions) and resulting supplier impacts. In addition, to the extent global vaccination programs do not achieve intended results and a longer period of economic and global supply chain and related disruption continues, the more adverse the impact will be on our ~~business. The Company’s India operation was shut down for five weeks during the second quarter~~business operations, financial performance and results of ~~2020.~~

~~The Company reported operating income of~~ ~~$616,000 compared to~~ ~~$184,000 for the three months ended June 30, 2020 reflecting the~~ ~~margin improvement.~~operations.

The Company recognized a loss on equity investment in unconsolidated subsidiary of $676,000 compared to $100,000 for three months ended June 30, 2020. The increase reflects the impact of SPAC legal and other costs related to the planned third quarter DFNS and IronNet business combination.

~~Other income (expense), net was~~ ~~$70,000~~ ~~compared to~~ ~~$232,000~~ ~~for the three months ended June 30, 2020. These balances are primarily comprised of~~ ~~unrealized gains from our investment portfolio.~~

~~We recorded a tax~~ ~~expense of $25,000 and $57,000 for~~ ~~the three months ended June 30, 2021 and 2020, respectively. The expense is based on an estimated annual effective tax rate across the jurisdictions in which we operate.~~

~~Net loss~~ ~~was $18,000~~, compared to net income of $255,000 for the three months ended June 30, 2020. The decrease reflects the aforementioned business combination related costs, lower investment portfolio gains partly offset by improved operating income in comparison to the second ~~quarter of 2020. Diluted net (loss) income per share for the three months ended June 30, 2021 and 2020 was $0.00and~~ ~~$0.05, respectively.~~

~~Total revenues~~ ~~were $13,418,000, a~~ ~~decrease of~~ ~~$2,259,000, or 14.4%, from revenues of $15,677,000 for the six months ended June 30, 2020.~~ Revenues were significantly impacted by the decline in shipments to the avionics market but benefited from strong space business performance. The comparison also reflects the pre-COVID-19 conditions during the first quarter of 2020.

Consolidated gross margin, which is consolidated revenues less manufacturing cost of sales as a percentage of revenues, improved to 36.3% from 33.2% for the six months ended June 30, 2020. Margin improvement was from favorable product mix and cost reductions including the elimination of certain previously required redundancies to preserve manufacturing capabilities in response to the COVID-19 impacts on our business. The Company’s India operation was shut down for over six weeks in the first half of 2020.

~~The Company reported operating income~~ ~~of $556,000 compared to~~ ~~$844,000 for the six months ended June 30, 2020. This decline was due to~~ ~~the reduced revenues somewhat offset by the above-described profitability improvements~~.

The Company recognized a loss on equity investment in unconsolidated subsidiary of $752,000 compared to $139,000 for the six months ended June 30, 2020. The increase reflects the impact of SPAC legal and other costs related to the planned third quarter DFNS and IronNet business combination.

~~Other income (expense), net was~~ ~~$242,000~~ ~~compared to ($152,000) for the six months ended June 30, 2020. These balances are comprised of~~ ~~gain (loss) from our investment portfolio and, to a lesser extent, currency translation.~~

~~We recorded a tax expense~~ ~~of $31,000 and $111,000 for~~ ~~the six months ended June 30, 2021 and 2020, respectively. The expense is based on an estimated annual effective tax rate across the jurisdictions in which we operate.~~

~~Net income was $9,000~~, compared to $438,000 for the six months ended June 30, 2020. The lower profitability reflects the aforementioned business combination related costs, partly offset by improved operating income and portfolio investment performance as compared to the six months ended June 30, 2020. Diluted net income per share for the six months ended June 30, 2021 and 2020 was $0.00 and $0.08, respectively.

~~As of June 30, 2021 and December 31, 2020, cash and cash equivalents were~~ ~~$15,254~~,000 and $18,331,000, respectively. In the first quarter of 2020, we raised approximately $3,254,000 as a result of sales of securities under our ATM Offering. In the second quarter 2021, we funded $2,725,000 for the Sponsor’s PIPE investment related to the SPAC.

Cash provided by operating activities for the six months ended June 30, 2021 and 2020 was $48,000 and $871,000, respectively. The $823,000 decrease was primarily due to the Company’s year-over-year reduction in net income of $429,000 and the unfavorable changes in working capital accounts of $702,000.

~~Cash used in~~ ~~investing activities for the six months ended June 30, 2021 and 2020~~ ~~was $3,125,000~~ ~~and $105,000, respectively. The $3,020,000 increase reflects $2,725,000 of funding for the Company’s~~ PIPE subscription agreement in connection with the planned third quarter DFNS and IronNet business combination and $295,000 of higher capital expenditures for production equipment to improve cost and efficiency.

~~For the six months ended June 30, 2021,~~ ~~no cash was provided by financing activities as compared~~ to the six months ended June 30, 2020, when the Company received $3,254,000 from the first quarter 2020 sale of securities under our ATM Offering, $103,000 from revolving credit agreement borrowings and $63,000 of proceeds from the exercise of stock options.

~~As of June 30, 2021, our consolidated working capital~~ ~~was $28,437,000~~ ~~compared to $30,384,000 as of December 31, 2020. As of June 30, 2021, we had current assets~~ ~~of $31,719,000, current~~ ~~liabilities~~ ~~of $3,282,000~~ ~~and a ratio of current assets to current liabilities of~~ ~~9.66~~ to 1.00. As of December 31, 2020, we had current assets of $33,781,000, current liabilities of $3,397,000 and a ratio of current assets to current liabilities of 9.94 to 1.00. As more fully described in Note C to the accompanying unaudited condensed consolidated financial statements, the Company’s $2,725,000 subscription agreement with the Sponsor was executed in March 2021 and paid in ~~May 2021~~. 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.

The Company has a loan agreement for a revolving line of credit with Synovus Bank for up to $3.5 million bearing interest at the London Inter-bank Offered Rate (LIBOR) 30-day rate plus 2.50%, with a floor of 0.50%. The loan agreement has a maturity date of May 12, 2022 and contains certain financial covenants. Borrowings under the loan agreement are secured by all of the property of two of the Company’s subsidiaries, M-tron Industries, Inc. and Piezo Technology, Inc. At June 30, 2021, the Company had ~~no borrowings~~ ~~outstanding under its revolving line of credit with Synovus Bank.~~

We believe that existing cash and cash equivalents, marketable securities, cash generated from operations and availability under our revolving credit agreement 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. However, we are continuing to monitor the outbreak of COVID-19 and its impact on our customers and suppliers, as well as our industry as a whole. To the extent that our customers and suppliers continue to be impacted by the COVID-19 outbreak, such impacts could materially disrupt our business.

Our board of directors has adhered to a practice of not paying cash dividends. This policy takes into account our long-term growth objectives, including our anticipated investments for organic growth, potential technology acquisitions or other strategic ventures, and stockholders' desire for capital appreciation of their holdings. No cash dividends have been paid to the Company's stockholders since January 30, 1989, and none are expected to be paid for the foreseeable future.

For a discussion of the Company’s critical accounting policies, 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, 2020.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. 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 June 30, ~~2021~~2022 was conducted under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures, as of June 30, ~~2021,~~2022, were effective.

There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

In the ordinary course of business, we may become subject to litigation or claims. We are not aware of any material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we or our subsidiaries are a party or to which our properties are subject.

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, ~~2021~~2022 (and are numbered in accordance with Item 601 of Regulation S-K):

** 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 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

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.

Delaware	38-1799862
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

		PAGE
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1213
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 6.	Exhibits	18
SIGNATURES		19


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).
10.1		Credit Agreement by and among M-Tron Industries, Inc., Piezo Technology, Inc. and Fifth Third Bank, National Association, dated June 15, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 21, 2022).
10.2		Promissory Note in favor of Fifth Third Bank, National Association, dated June 15, 2022 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 21, 2022).
10.3		Security Agreement by and among M-Tron Industries, Inc. and Fifth Third Bank, National Association, dated June 15, 2022 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on June 21, 2022).
10.4		Security Agreement by and among Piezo Technology, Inc. and Fifth Third Bank, National Association, dated June 15, 2022 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on June 21, 2022).
31.1*		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101

	THE LGL GROUP, INC.
Date: August ~~11, 2021~~9, 2022	By:	/s/ Mike J. Ferrantino
		Mike J. Ferrantino
		President and Chief Executive Officer (Principal Executive Officer)
Date: August ~~11, 2021~~9, 2022	By:	/s/ James W. Tivy
		James W. Tivy
		Chief Financial Officer (Principal Financial Officer)


2021	$	70
2022		113
2023		113
2024		113
2025		13
Total lease payments		422
Less: interest		(60	)
Total lease payments	$	362