LGL GROUP INC

1. Overview and Basis of Presentation

Overview

The LGL Group, Inc. is a holding company engaged in services, merchant investment, and manufacturing business activities. The Company was incorporated in1928 under the laws of the State of Indiana and reincorporated under the laws of the State of Delaware in2007. Unless the context indicates otherwise, the terms "LGL," "LGL Group," "we," "us," "our," or the "Company" mean The LGL Group, Inc. and its consolidated subsidiaries.

The Company’s manufacturing business is operated through its subsidiary Precise Time and Frequency, LLC ("PTF"), which has operations in Wakefield, Massachusetts. PTF is engaged in the design of high-performance Frequency and Time Reference Standards that form the basis for timing and synchronization in various applications.

The Company's merchant investment business is operated through its subsidiary Lynch Capital International, LLC ("Lynch Capital"), which utilizes various structures and vehicles to build shareholder value, including certain special purpose vehicles, which* maybe syndicated for investment, and involve certain fee generating activities. The Company could act as the financial and management sponsor, raise capital from external nonaffiliated investors, and may*receive management fees and success-based incentives in accordance with market practice.

Skyline Transaction

During thesecond quarter of2026, Lynch Capital initiated a syndicated transaction to raise up to $3.0 million for an investment into a convertible promissory note (the "Skyline Note") issued by Skyline Instruments Corporation ("Skyline"), a dual-use commercial and defense technology company developing precision timing and synchronized sensing infrastructure for environments where GPS is fragile, contested or unavailable.

Of the $2,000 of syndicated capital raised in* June 2026 (the "First Closing"), Lynch Capital contributed $850. The capital was invested in Skyline Instruments May 2026,a Series ofCGF2021* LLC ("Skyline SPV"). Skyline SPV then invested $1,968 into the Skyline Note (net of formation and administrative expenses). Lynch Capital serves as the investment advisor to Skyline SPV pursuant to an investment advisory agreement. As of* June 30, 2026,*Lynch Capital holds a 42.5% equity interest in Skyline SPV.

In connection with the Skyline Transaction, Skyline SPV entered into a side letter with Skyline granting Skyline SPV a board designation right, participation rights in future financings, and approval rights over certain extraordinary events. Pursuant to the board designation rights, the Company's Chief Executive Officer was elected to the board of directors of Skyline.

In* July 2026,Skyline SPV received an additional $505 equity investment from a newthird* party investor. Skyline SPV then invested $494 in the Skyline Note (net of administrative expenses) (the "Second Closing"). Following the Second Closing, Lynch Capital's equity interest in Skyline SPV decreased to 33.9%.

Refer to Note2 - Summary of Significant Accounting Policies and Note6 - Variable Interest Entities for further information.

Basis of Presentation

These unaudited Condensed Consolidated Financial Statements donot include all disclosures that are normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and should be read in conjunction with the audited Consolidated Financial Statements and the related notes included in our Annual Report on Form10-K for the year ended* December 31, 2025* (the "2025 Annual Report") filed with the Securities and Exchange Commission (the "SEC") on* March 30, 2026*. The consolidated financial information as of* December 31, 2025* included herein has been derived from the audited Consolidated Financial Statements in the2025 Annual Report.

The Condensed Consolidated Financial Statements include the accounts of The LGL Group, Inc., its majority-owned subsidiaries, and variable interest entities ("VIEs") of which we are the primary beneficiary.

In the opinion of management, these Condensed Consolidated Financial Statements contain all adjustments (consisting of normal recurring adjustments, including eliminations of material intercompany accounts and transactions) considered necessary for a fair statement of the results presented herein. Operating results for thethree andsix months ended* June 30, 2026* arenot necessarily indicative of the results that* maybe expected for the full year ending December 31, 2026*.

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.