LGL GROUP INC

For a discussion of the Company's potential risks and uncertainties, refer to Part I, Item 1A. Risk Factors in the 2025 Annual Report andTrends and Uncertainties in Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2. of this Quarterly Report on Form 10-Q.

Other than the trends and uncertainties described under Trends and Uncertainties above, the risk factors described in Part II, Item 1A. of this Quarterly Report, and general economic conditions affecting our industry, we are not aware of any additional material trends or uncertainties that may reasonably be expected to have a material impact, favorable or unfavorable, on our revenues or income beyond those described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2025.

Risks Related to the Skyline Transaction

Our investment in an early-stage company through a consolidated special purpose vehicle is subject to significant risk, and we could lose some or all of the amounts we have invested or committed.

Through our wholly owned subsidiary, Lynch Capital International, LLC, we invested $850 in Skyline Instruments May 2026, a Series of CGF2021 LLC (the "Skyline SPV"), a pooled investment vehicle that holds a note receivable from Skyline Instruments Corporation ("Skyline"), an early-stage company developing precision timing and GPS-denied sensing technologies. Early-stage companies such as Skyline have limited operating histories, are not yet profitable, and depend on the continued development and commercialization of unproven technologies and on their ability to secure defense and commercial contracts. Skyline may never generate meaningful revenue or achieve profitability, may require additional capital that is not available on acceptable terms, and may fail. Because we consolidate Skyline SPV as a variable interest entity, the full carrying amount of Skyline SPV's investment is reflected on our Condensed Consolidated Balance Sheets, and our maximum exposure to loss is the carrying amount of our investment in Skyline SPV. If Skyline's business does not develop as anticipated, we could lose some or all of this amount, which could adversely affect our results of operations and financial condition.

Our Skyline investment is illiquid and difficult to value, and its carrying value may not be realized.

There is no public market for the securities of Skyline or for interests in Skyline SPV, and we may be unable to dispose of our interest or recover our investment when we wish to do so, or at all. The value of an early-stage privately held company is inherently uncertain and is based on significant judgment and assumptions about future performance, financing, and market conditions. Subsequent events, including down-round financings, changes in Skyline's prospects, or an inability to secure anticipated contracts, could require us to recognize impairment or other losses, which could be material.

Risk Related to Our Securities

Stockholders who did not fully exercise their subscription rights in our June 2026 rights offering experienced a reduction in their proportionate ownership and voting interests.

On June 5, 2026, we distributed 6,550,435 transferable subscription rights to purchase shares of our common stock at a subscription price of $6.90 per share. Stockholders who did not exercise their subscription rights in full, or who sold or did not use their rights, own a smaller proportional interest in the Company, and their voting and economic interests were reduced, as a result of the shares issued in the offering.

We have broad discretion over the use of the net proceeds from the rights offering, and we may not use them effectively.

We intend to use the net proceeds from the rights offering to advance a broader defense technology and resilient infrastructure strategy, including opportunities related to precision timing and frequency and adjacent critical technologies. Our management has broad discretion in the application of these proceeds and could apply them in ways that do not improve our results of operations or enhance the value of our common stock. Pending their use, the proceeds may be invested in ways that do not yield a favorable return.

The subscription rights and our common stock have been subject to price volatility, and the transition of the rights to trading over the counter may have affected their liquidity.

The subscription rights were listed on the NYSE American under the symbol "LGL RT" and subsequently traded over the counter under the symbol "LGLGR." Securities that trade over the counter may have less liquidity and greater price volatility than securities listed on a national securities exchange, which may have affected the ability of holders to sell their rights at a desired time or price. The market price of our common stock may also fluctuate as a result of the additional shares issued in the offering.