FORM 10-K/A

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

[ X ]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1999       Commission file number  1-106
--------------------------------------------                              -----
                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from          to


                                LYNCH CORPORATION
                                -----------------
             (Exact name of Registrant as specified in its charter)

       Indiana                                            38-1799862
       -------                                             ----------
 State of other jurisdiction                           (I.R.S. Employer
 Incorporation or organization                        Identification No.)



401 Theodore Fremd Avenue, Rye, NY                              10580
----------------------------------                              -----
Address of principal executive offices)                        (Zip Code)

Registrant's telephone number, including area code    (914) 921-7601
                                                      --------------

Securities registered pursuant to Section 12(b) of the Act:

Title of each class                                      Name of each exchange
-------------------                                       on which registered
                                                          -------------------
Common Stock, No Par Value                            American Stock Exchange


Securities registered pursuant to section 12(g) of the Act:  None

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  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. Yes X No

Indicate by mark if  disclosure  of  delinquent  filers  pursuant to Item 405 of
Regulations S - K is not  contained  herein,  and will not be contained,  to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-K,  or any
amendment to this Form 10-K. [X]

The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the
Registrant (based upon the closing price of the Registrant's Common Stock on the
American Stock Exchange on March 15, 2000 of $30 per share) was $32,048,000. (In
determining this figure, the Registrant has assumed that all of the Registrant's
directors  and  officers are  affiliates.  This  assumption  shall not be deemed
conclusive for any other purpose.)

The number of outstanding shares of the Registrant's  Common Stock was 1,510,183
as of March 29, 2000.


<PAGE>




                                     PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS

Item 5 is amended in its entirety as follows:

The Common Stock of Lynch  Corporation  is traded on the American Stock Exchange
under the symbol "LGL." The market price highs and lows in consolidated  trading
of the Common Stock during the two years ended  December 31, 1999 and 1998,  are
as follows:
<TABLE>
<CAPTION>
                                                              Three Months Ended
1999                     March 31   June 30       Sept. 30          Dec. 31
                         --------   -------       --------         --------
                                               7/1-9/1- 9/2-9/30
<S>                       <C>        <C>       <C>   <C>        <C>
High .............        85 1/2      84       87    34 3/4      26 1/2
Low ..............        70 1/2      69       78    26 1/2      18 7/8
</TABLE>

<TABLE>
<CAPTION>

1998                     March 31   June 30    Sept. 30        Dec. 31
                          ------     ------     ------          ------

<S>                      <C>            <C>        <C>         <C>
High .............       109            113        100 1/2     82
Low ..............        77 1/4         88         76         69 1/2
</TABLE>


At March 15, 2000, the Company had 901 shareholders of record.

On  September  1, 1999,  the  Company  spun off the shares of Lynch  Interactive
Corporation to its shareholders. As a result, stock prices before and after that
date are not comparable. The high and low sales prices of Lynch Interactive from
September 1, 1999 to December 31, 1999, were $120 and $42, respectively, and
the closing price at December 31, 1999, was $99 7/8.

The Board of  Directors  has  adopted a policy of not paying cash  dividends,  a
policy which is reviewed annually.  This policy takes into account the long term
growth   objectives  of  the  Company,   especially  its  acquisition   program,
shareholders'  desire for capital appreciation of their holdings and the current

<PAGE>

tax law disincentives for corporate dividend distributions. Accordingly, no cash
dividends have been paid since January 30, 1989 and none are expected to be paid
in 2000.

ITEM 6. SELECTED FINANCIAL DATA

Item 6 is amended in its entirety as follows:
<TABLE>

                       LYNCH CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED SELECTED FINANCIAL DATA

                   (Adjusted to Reflect Discontinued Operations and
                   Spin Off of Lynch Interactive Corporation)
                     (in thousands except per share amounts)

<CAPTION>
                                                                       Year Ended December 31 ( a )
                                                         1999        1998         1997        1996         1995
                                                         ----        ----         ----        ----         ----

<S>                                                  <C>          <C>          <C>          <C>          <C>
Revenues..........................................   $ 194,222    $ 187,644    $ 153,735    $ 166,976    $ 157,146
Operating Profit (b)..............................          85        4,074        6,730        8,473       11,945
Net Financing Activities..........................      (9,528)      (8,392)      (4,884)      (5,166)      (3,463)
Gain in Sale of Subsidiary Stock and Other
  Operating Assets................................        --          2,090          (91)       5,072         --
Income (Loss) from Continuing Operatins before
  Income Taxes, Minority Interests, Discontinued
  Operation and Extraordinary Items...............      (9,443)      (2,228)       1,755        8,379        8,482
(Provision) Benefits For Income Taxes.............       2,544        1,408         (301)      (3,571)      (3,267)
Minority Interest.................................       2,647        1,107         (121)        (119)        (634)
                                                         ------        ------       ------       ------       ------
Income (Loss) From Continuing Operations Before
  Discontinued Operations and Extraordinary Item..      (4,252)         287        1,333        4,689        4,581
Operations of Lynch Interactive Corporation (f)         (7,493)       4,929       (3,349)        (818)         467
Discontinued Operations (c)......................         (572)      (1,859)        (862)         173           97
Minority Interests
Gain (Loss) on Sale of Spinnaker's Industrial
  Tape Segment...................................        10,431         --           --           --           --
Extraordinary Items (d)                                     303         --           --         (1,348)        --
                                                         ------        ------       ------       ------       ------
Net Income (Loss)...............................        $ (1,583)     $3,357      $( 2,878)    $ 2,696)     $ 5,145
                                                        ========      ========    =========    ========     ========

Per Common Share (e)
  Income (Loss) from Continuing Operation
  Befopre Discontinued Operations and
  Extraordinary Items...........................
     Basic......................................        $  (3.00)     $   .20      $   .94      $  3.38     $  3.32
     Diluted....................................        $  (3.00)         .20          .94         3.34        3.25
  Net Income (Loss)
     Basic......................................           (1.12)        2.37        (2.03)        1.94        3.73
     Diluted....................................           (1.12)        2.37        (2.03)        1.92        3.66

Cash, Securities and Short-Term Investments.....        $  13,106      $ 1,132     $  6,499    $  10,561    $  5,405
Restricted Cash (h)                                        56,026           --           --           --          --
Total Assets (Net of assets distributed
   to shareholders(f)...........................          211,192      251,658      183,720      144,417     144,984
Long-Term Debt (g) .............................          116,765      126,976      115,159       96,577      62,557
Shareholders Equity (Deficit)(f)................           15,991       11,441       14,464       (6,083)      6,085
<FN>

Notes:

(a)  The data  presented  herein  reflect  the  spin  off of  Lynch  Interactive
     Corporation  (Interactive)  from  the  Company  and the  sale by  Spinnaker
     Industries,  Inc. (Spinnaker), a 47.6% owned consolidated subsidiary of the
     Company,  of its industrial tape units, all of which transactions  occurred
     in the third quarter of 1999.  Accordingly,  the operating  results of both
     Interactive  and the  industrial  tape  segment have been  segregated  from
     continuing  operations  of the  Company and are  reported as separate  line
     items.  The data presented also includes  results of the business  acquired
     from S. D. Warren  (name  changed to  Spinnaker  Coating-Maine,  Inc.) from
     March 17, 1998.

(b)  Operating  profit is sales and  revenues  less  operating  expenses,  which
     excludes  investment  income,  interest  expense,  share of  operations  of
     affiliated companies, minority interests and taxes.

(c)  Discontinued  operations  of  the  industrial  tape  segment  of  Spinnaker
     Industries(See   Note  3  to   Financial   Statements)and   Lynch   Tri-Can
     International in 1995 and 1996.

(d)  Gain (loss) on early extinguishment of debt at Spinnaker in 1996 and 1999

(e)  Based on weighted average number of common shares outstanding - restated to
     conform to SFAS #128 in 1996 and prior years.

(f)  No cash  dividends  have been declared over the period.  In 1999,  for each
     share of Lynch  Common  Stock,  shareholders  received  one  share of Lynch
     Interative  Corporation in a Spin Off of the multimedia and  transportation
     business. (See Note 4 to Financial Statements).  In 1997, for each share of
     Lynch  Common   Stock,   shareholders   received  one  share  of  East/West
     Communications,  Inc., an F- block PCS licensee  with  licenses  covering a
     population of 20 million. For years prior to 1999,  shareholders equity has
     been restated to reflect the net assets of Lynch Interactive distributed to
     shareholders.

(g)  Includes  $115.6  million of  long-term  debt at December 31, 1999 of 47.6%
     owned Spinnaker Industries.

(h)  See  dicussion of  Restricted  Cash in Note 6-Notes  Payable and  Long-Term
     Debt.
</FN>
</TABLE>


<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

Item 7 is amended in its entirety as follows:

RESULTS OF OPERATIONS

YEAR 1999 COMPARED TO 1998

The accompanying audited consolidated  financial statements reflect the Spin Off
of Lynch Interactive  Corporation  (Interactive) from Lynch Corporation  (Lynch)
that  occurred  in the  third  quarter  of 1999 and  also the sale by  Spinnaker
Industries,  Inc. (Spinnaker),  a consolidated subsidiary of the Company, of its
two industrial tape units,  Central Products  Company and Spinnaker  Electrical,
that also  occurred in the third  quarter of 1999.  Accordingly,  the  operating
results of both Interactive and the industrial tape segment have been segregated
from  continuing  operations  of the Company and are  reported as separate  line
items on the financial  statements as discontinued  operations.  The comparative
amounts for 1998 have also been restated to reflect the above transactions.  The
ensuing narrative  considers these changes and only includes  discussions of the
Company as it is currently composed.  EBITDA is presented because it is a widely
accepted  financial  indicator  of value and ability to incur and service  debt.
EBITDA is not a substitute  for  operating  income or cash flows from  operating
activities in accordance with generally accepted accounting principles.

Revenues for the year ended December 31, 1999 were $194.2  million,  an increase
of $6.6 million from the comparable 1998 period. Spinnaker's 1999 net sales were
$162.1 million,  compared to $159.1 million in 1998. The growth in net sales for
1999  is  attributed  to  approximately  $7.6  million  in net  sales  from  the
acquisition of Coating-Maine  and higher unit sales of certain label stocks from
1998,  which were offset by increased  domestic  capacity and the  disruption of
business  at  Entoleter  from a  mid-summer  labor  dispute.  Revenues at M-tron
increased by $3.7 million due to  increased  demand from the  telecommunications
industry and  increased  sales of new  products.  Lynch  Systems'  revenues were
essentially flat.

Operating  profit for 1999 declined by $4.0 million from the operating profit in
the  prior  year.   Spinnaker's   operating  profit  declined  by  $3.7  million
principally  due to lower gross margins as a result of the lower pricing and the
impact of the  Entoleter  labor  dispute,  partially  offset by gains on sale of
fixed assets and lower selling,  general and administrative  expenses.  M-tron's
operating profit increased by $.4 million due to increased volume.

Subsequent to the spin off of Interactive,  the Company, with the concurrence of
the  holders  of all  outstanding  SAR units,  terminated  its SAR  program  for
corporate management, including all outstanding units, thus eliminating possible
future profit and loss and cash flow distortions associated with the program. As
a result of the  termination,  the Company  recorded  approximately  $700,000 of
related corporate expense.

In order to improve  operational  efficiencies,  Spinnaker Coating  restructured
operations at its Maine unit in early 2000.  Also, in view of the narrowed scope
of the  Spinnaker  business  as a  result  of the  sale of the  industrial  tape
business,  steps  are being  taken to reduce  Spinnaker  corporate  overhead  by
transferring  functions  from the  Dallas  headquarters  to the  main  Spinnaker
Coatings  office in Ohio.  As a result,  Spinnaker  has  announced it expects to
record a charge of approximately $500,000 in the first quarter of 2000.

Investment  income  increased due to the investment in short term  securities of
approximately $75 million in proceeds  remaining,  after payment of certain debt
obligations,  from the sale by Spinnaker of its Central  Products and Electrical
Tape businesses.

Interest  expense was $11.9 million and increased from the prior year due to the
allocation of a portion of the interest  associated  with the  Spinnaker  10.75%
Senior Secured Notes Due 2006 (the Senior Notes) to the discontinued  industrial
tape segment that ceased at the time of their sale in the third quarter of 1999.
Interest  expense  also  increased  due to higher  debt  levels  resulting  from
Spinnaker's acquisition of the Warren assets.

Interest  expense  from  continuing  operations  is subject  to certain  matters
associated  with the use of the net  proceeds  from the sales of the  industrial
tape units of  Spinnaker,  including  retirement  of senior  debt or  "permitted
investments" as defined under the Indenture.

The income tax benefit includes  federal,  as well as state and local taxes. The
tax benefit for the year ended December 31, 1999, and 1998, represents effective
tax rates of 27% for 1999 and 63% for 1998.  The  differences  from the  federal
statutory  rate  are  principally  due to the  effect  of  state  income  taxes,
operating losses of subsidiaries and amortization of non-deductible goodwill.

Minority  interests  contribution  to the net income  (loss)  increased  by $1.5
million  for the year  from the  prior  year due to the  increased  losses  from
continuing operations at Spinnaker and the January 1, 1999, repurchase of M-tron
minority interest.

On August 12, 1999,  the Board of Directors  approved a plan to  distribute  the
stock  of  Lynch  Interactive  Corporation  on  a  one  for  one  basis  to  the
shareholders of Lynch  Corporation ( the spin off). Lynch completed the spin off
of Lynch Interactive Corporation on September 1, 1999, to stockholders of record
on August 23, 1999.  Pursuant to the spin off, each Lynch  shareholder  received
one share of Interactive stock for each share of Lynch owned. Lynch had received
a private  letter  ruling from the  Internal  Revenue  Service that the spin off
would be tax free to Lynch shareholders. Interactive has listed its stock on the
American Stock Exchange. (LIC)

Interactive owns all of what was Lynch's multimedia and service businesses while
Lynch  retains the  manufacturing  businesses.  Interactive  owns the  telephone
companies,  television  interests and PCS  interests,  as well as the 55% equity
interest of the Morgan Group, Inc. In addition,  Interactive owns a 13.6% equity
interest  in  Spinnaker  Industries,  Inc.  Lynch owns a 48% equity  interest in
Spinnaker  after the spin  off,  as well as M-tron  Industries,  Inc.  and Lynch
Systems, Inc.

As a result of the spin off, the Company's  multimedia and services segments are
being reported as operations  distributed to  shareholders  in the  accompanying
consolidated  financial  statements.  Accordingly,  operating  results  of Lynch
Interactive  Corporation  have been segregated  from  continuing  operations and
reported  as a separate  line item on the  statement  of  operations.  Lynch has
restated its prior year financial statements to present the operating results of
Lynch  Interactive on a comparable  basis.  Interactive's  net sales were $204.6
million for the year ended  December  31,  1999,  and $205.1  million and $194.1
million for the fiscal years ended December 31, 1998 and 1997, respectively.

Prior to the spin off,  Lynch  Interactive  recorded a $15.4  million  valuation
reserve  due to the  decline  in  market  value of its  investment  in  personal
communications  licenses.  As a result,  Lynch Interactive reported an operating
loss for the first eight months of 1999.

In the third  quarter of 1999,  Spinnaker  sold its two  industrial  tape units,
Central Products Company and Spinnaker Electrical, which comprise its industrial
tape segment. Accordingly, operating results of the industrial tape segment have
been  segregated  from  continuing  operations  and reported  separately  in the
statement of operations. Lynch has restated its prior years financial statements
to  present  the  operating   results  of  the  industrial  tape  segment  as  a
discontinued operation. The industrial tape segment's net sales, up to the point
of its sale, were $69.5 million for the year ended December 31, 1999, and $121.8
million and $119.7  million for the fiscal  years  ended  December  31, 1998 and
1997, respectively.

Net loss for the year ended December 31, 1999, was $1.6 million,  or ($1.12) per
share, which compares to the net income of $3.4 million, or $2.37 per share, for
the same period of 1998 due primarily to the operating  losses  mentioned  above
and the loss incurred by Interactive,  offset by Spinnaker's gain on sale of its
industrial tape units ($10.4 million after income taxes and minority interest).

Total backlog of  manufactured  products at December 31, 1999 was $35.3 million,
which  represents  an increase of $25.5 million from the backlog of $9.8 million
at December 31, 1998.  All  operating  units  contributed  significantly  to the
increase  in backlog at December  31,  1999.  Included in this  backlog for both
periods is a $2.4 million  payment  from a customer  for an earlier  glass press
order at Lynch Systems which was  subsequently  cancelled.  The customer can use
this amount for future orders and, if not  utilized,  will be forfeited to Lynch
Systems.  Included in the backlog at December 31, 1999,  is a $14 million  order
for large glass press machines at Lynch Systems.  In connection with this order,
Lynch Systems has obtained a substantial  credit facility to protect advances by
the customer and for working capital.

YEAR 1998 COMPARED TO 1997

Revenues  increased to $187.6 million in 1998 from $153.7 million in 1997, a 22%
increase. The acquisition made during 1998 by Spinnaker Industries, Inc. was the
most  significant  contributor  to this increase.  On March 17, 1998,  Spinnaker
acquired  from  S.  D.  Warren  its  assets  in  Westbrook,  Maine  utilized  to
manufacture  pressure  sensitive label stock.  This operation  contributed $47.0
million to Spinnaker's revenue increase. Spinnaker Coating, Inc. (Ohio) reported
small revenue  decreases  during 1998 as a result of higher unit volume,  but at
overall lower prices, while Spinnaker's Entoleter subsidiary had a 39% increase.
Lynch Systems'  revenues  decreased by $13 million from 1997 to 1998 due to lack
of order  activity  for CRT glass  press  machines.  During 1998 and early 1999,
Lynch  Systems added  several new consumer  glass press  machines to its product
offerings  in an  effort to be less  dependent  on  orders  for CRT glass  press
machines in the future.

Operating  profits for 1998 were $4.1  million,  down from $6.7 million in 1997.
Operating  profits  fell by $2.6  million due to the EBITDA  increase  offset by
increased  depreciation and amortization of $1.7 million  associated with the S.
D. Warren acquisition.

Effective  September 30, 1998, the Company  amended its SAR (stock  appreciation
rights) Program so that the SARs become  exercisable only in the event the price
for the Company's  shares double from the SAR grant price within five years from
the  original  issuance.  The grant  prices of the 42,700  SARs  outstanding  at
December 31, 1998 range from $63.03 to $84.63. On December 31, 1998, the closing
price of the Company's  common shares in trading on the American  Stock Exchange
was $70.50.  This  amendment  eliminated  the  recording  of the profit and loss
effect from changes in the market price in the  Company's  common stock until it
is probable  that the SARs will become  exercisable.  During  1997,  the Company
recorded  $0.4  million SAR expense and in 1998,  prior to the  amendment of the
program, $0.2 million in SAR income.

Investment income was approximately $.2 million in 1998 and $.3 million in 1997.

Interest  expense  increased  by $3.4  million  in 1998  compared  to 1997.  The
increase is due primarily to the effect of financing  the Spinnaker  acquisition
of the Warren assets.

On July 31, 1998,  Spinnaker  Industries,  Inc. completed the acquisition of the
electrical  tape division of tesa tape, inc. A portion of the purchase price was
satisfied by the issuance of 200,000 shares, subject to certain adjustments,  of
Spinnaker's  Class A common  stock.  As a result of this  issuance,  the Company
recorded a gain on sale of  subsidiary  stock of $2.1  million,  or $1.2 million
($0.87 per share) after income taxes.

The 1998 tax benefit of $1.4 million,  includes  federal,  state and local taxes
and represents an effective rate of 63% versus 17.2% effective tax rate in 1997.
The  difference  in the  effective  rates is primarily due to the effects of the
amortization  of  goodwill,  the  state  and local  income  taxes and  losses of
subsidiaries.

During 1998,  minority  interest  was income of $1.1 million  versus $.1 million
expense in 1997. The variance was primarily  associated with  additional  losses
recorded by Spinnaker (61% owned subsidiary by the Company at December 31, 1998)
during 1998.

LIQUIDITY AND CAPITAL RESOURCES

At December  31,  1999,  the Company  had  current  assets of $79.7  million and
current  liabilities  of $56.5  million.  Working  capital was  therefore  $23.2
million as compared to $18.8  million at December  31,  1998.  The  increase was
primarily  due to the  increase  in cash and  reduction  of short  term  working
capital  debt at  Spinnaker  resulting  from  the  sale of its  industrial  tape
segment.

Capital expenditures were $3.8 million in 1999 and $3.3 million in 1998. Overall
2000 capital  expenditures are expected to be approximately  25% higher than the
1999 level.

At December 31, 1999,  total debt was $141.6  million,  which was $47.1  million
less than the $188.7 million at the end of 1998.  Debt at year end 1999 included
$118.4  million of fixed  interest  rate debt,  at an average  interest  rate of
10.7%,  and $23.2 million of variable  interest rate debt at an average interest
rate of 8.1%.  Additionally,  the  Company had $12.3  million in unused  lines
of credit at December 31, 1999, of which $11.5 million was attributed to
Spinnaker.

Since 1987,  the Board of Directors of Lynch has  authorized  the  repurchase of
400,000 common shares. At December 31, 1999, Lynch's remaining  authorization is
to repurchase  an additional  161,000  shares of common  stock.  In 1999,  8,130
shares were purchased for treasury at a cost of $523,000.

The Board of  Directors  has  adopted a policy of not paying cash  dividends,  a
policy which is reviewed annually.  This policy takes into account the long term
growth   objectives  of  the  Company,   especially  its  acquisition   program,
shareholders'  desire for capital appreciation of their holdings and the current
tax law disincentives for corporate dividend distributions. Accordingly, no cash
dividends have been paid since January 30, 1989 and none are expected to be paid
in 2000.

In  March,  2000  Lynch  Systems  completed  a project  specific  line of credit
totaling  $7.1  million  related to a contract  to  deliver  equipment  in 2000.
Substantially  all assets of Lynch  Systems are pledged in support of the credit
facility. In addition,  the Company has guaranteed the full amount of the credit
facility  and has pledged $4 million of its  Spinnaker  Class A Common  Stock as
additional collateral.

Lynch Corporation maintains an active acquisition program and generally finances
each  acquisition  with a significant  component of debt. This  acquisition debt
contains  restrictions  on the  amount of  readily  available  funds that can be
transferred  to the  parent  company  from its  subsidiaries.  As the  result of
acquisitions, Lynch consolidated, Spinnaker and certain acquisition subsidiaries
have relatively high debt to equity ratios.

The Company has a significant  need for resources to fund the  operations of the
holding  company and future  growth.  There  currently is no credit  facility in
place at the Lynch  corporate  level,  and the Company is currently  considering
various long and short term financing arrangements.  One alternative could be to
sell a portion  or all of  certain  investments  in  operating  entities  either
directly or through an  exchangeable  debt  instrument.  Additional  debt and/or
equity  financing  vehicles  at  corporate  and/or  subsidiaries  are also being
considered.  While management expects to obtain adequate financing  resources to
enable the company to meet its obligations,  there is no assurance that such can
be readily obtained or at reasonable costs.

The  Company is  exploring  all options  with  respect to  Spinnaker,  including
liquifying and monetizing its investment,  and searching for ways to provide the
Company with a more financially visible investment with respect to M-tron. There
is no assurance that any transaction will be implemented.

In March,  2000, the Company completed the previously  announced sale of 100,000
shares of its common stock to its Chairman at $30 per share, or $3 million. This
transaction is subject to shareholder  ratification at the Company's 2000 annual
meeting. These funds will be available for general corporate purposes.

YEAR 2000

The Company had  initiated a  comprehensive  review of its  computer  systems to
identify  the  systems  that  could be  affected  by the "Year  2000"  issue and
developed an  implementation  plan to resolve the issue. The Year 2000 issue was
the result of computer  programs  being  written  using two digits  (rather than
four) to define the applicable  year. Any of the Company's  programs or programs
utilized  by  vendors  to the  Company  that have  time-sensitive  software  may
recognize  a date using "00" as the year 1900  rather  than the year 2000.  This
could have resulted in a major system failure or  miscalculation.  The Company's
Year 2000  review was  performed  primarily  by internal  staff,  and in certain
operations  supplemented  by  outside  consultants.  The  principal  Information
Technology  (IT)  systems  for the Company  are sales  order  entry,  shop floor
control,  inventory control and accounting. The Year 2000 may have also impacted
various non-IT systems,  including among other things  security  systems,  HVAC,
elevator systems, and communications systems. In addition, each of the Company's
businesses  may have been  impacted  by the Year 2000  readiness  of third party
vendors/suppliers.

The assessment phase for the Company's manufacturing businesses was completed by
the 4th quarter of 1999. Based upon its identification  and assessment  efforts,
the  Company  determined  that  certain of its  computer  and  software  used in
manufacturing and accounting systems required replacement or modification.  Such
replacements  and  modifications  were completed in the 4th quarter of 1999. The
total  cost  of  Year  2000  remediation  was  $0.2  million.   A  comprehensive
contingency plan had been completed in the 4th quarter of 1999.

The assessment, implementation and contingency plans for the Company's Year 2000
program were based on  management's  estimates and were developed using numerous
assumptions of future events,  some of which were beyond the Company's  control.
The  Company  believed  that with  modifications  to existing  software  and the
conversion  to new  software,  the Year 2000  issue  would not pose  significant
operational problems for the Company as a whole.

The Company  experienced  no  significant  occurrences  related to the Year 2000
issue.

MARKET RISK

The Company is exposed to market risk  relating to changes in the general  level
of U.S. interest rates. Changes in interest rates affect the amounts of interest
earned  on  the  Company's  cash  equivalents  and  short-term  investments  and
restricted  cash.  The  Company  generally  finances  the  debt  portion  of the
acquisition  of long-term  assets with fixed rate,  long-term  debt. The Company
generally  maintains  the majority of its debt as fixed rate in nature either by
borrowing  on a fixed  long-term  basis or, on a limited  basis,  entering  into
interest rate swap  agreements.  The Company does not use  derivative  financial
instruments for trading or speculative purposes. Management does not foresee any
significant  changes in the strategies  used to manage interest rate risk in the
near future,  although the strategies  may be  reevaluated as market  conditions
dictate.

At December 31,  1999,  approximately  $23.2  million,  or 16% of the  Company's
long-term debt and notes payable bears interest at variable rates.  Accordingly,
the Company's earnings and cash flows are affected by changes in interest rates.
Assuming the current level of  borrowings  for variable rate debt and assuming a
one  percentage  point  change in the 1999  average  interest  rate under  these
borrowings,  it is estimated that the Company's  1999 and 1998 interest  expense
would have changed by $.2 million and $.5 million, respectively. In the event of
an adverse  change in interest  rates,  management  would likely take actions to
further  mitigate its exposure.  However,  due to the uncertainty of the actions
that would be taken and their  possible  effects,  the analysis  assumes no such
actions.  Further,  the analysis  does not consider the effects of the change in
the level of overall economic activity that could exist in such an environment.



ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Item 8 is amended in its entirety as follows:

         See Item 14(a).

<PAGE>



                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)            The following documents are filed as part of this amendment to
                  Form 10-K Annual Report:

                  (1)       Financial Statements:

                  The  Report  of   Independent   Auditors  and  the   following
                  Consolidated  Financial Statements of the Registrant are
                  amended in their entirety as follows:

                  Consolidated Balance Sheets at December 31, 1999 and 1998

                  Consolidated Statements of Operations - Years ended December
                   31, 1999, 1998, and 1997

                  Consolidated  Statements of Shareholders' Equity - Years ended
                    December 31, 1999, 1998, and 1997

                  Consolidated  Statements of Cash Flows - Years ended  December
                   31, 1999, 1998, and 1997

                  Notes to Consolidated Financial Statements

                  (2)  Financial Statement Schedules as of December 31, 1999
                  and 1998 and for the three years ended December 31, 1999:

                  Schedule I - Condensed Financial Information of Registrant

                  Schedule II - Valuation and Qualifying Accounts

                  All  other  schedules  for  which  provision  is  made  in the
applicable  accounting  regulation of the Securities and Exchange Commission are
not required under the related instructions, or are inapplicable,  and therefore
have been omitted.

         See Page 2 above re Forward Looking Information.
         -----------------------------------------------

(c)         The  following  Exhibits  listed in the Exhibit Index are filed with
            this amendment to Form 10-K Annual Report:

         23.1    -     Consent of Ernst & Young LLP

         27.A    -     Amended Financial Data Schedule


(d)           Financial Statement Schedules:

              Financial Statement Schedules are listed in response to
              Item 14(a)(2)





<PAGE>




REPORT OF INDEPENDENT AUDITORS

Shareholders and Board of Directors
Lynch Corporation

We  have  audited  the  accompanying   consolidated   balance  sheets  of  Lynch
Corporation  and  subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of operations,  shareholders' equity, and cash flows for
each of the three years in the period ended  December 31, 1999.  Our audits also
included the financial  statement  schedules  listed in the index at Item 14(a).
These financial statements and schedules are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedules based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated  financial position of Lynch
Corporation and  subsidiaries at December 31, 1999 and 1998 and the consolidated
results of their  operations and their cash flows for each of the three years in
the period ended  December 31, 1999, in conformity  with  accounting  principles
generally  accepted in the United  States.  Also,  in our  opinion,  the related
financial  statement  schedules,  when  considered  in  relation  to  the  basic
financial  statements taken as a whole, present fairly, in all material respects
the information set forth therein.


                                             /s/ ERNST & YOUNG LLP

Stamford, Connecticut
March 28, 2000


<PAGE>
<TABLE>


                       LYNCH CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

<CAPTION>

ASSETS                                                             December 31     December 31
                                                                      1999             1998
CURRENT ASSETS:
<S>                                                                   <C>          <C>
     Cash and cash equivalents ....................................   $  13,106    $   1,132
     Trade accounts receivables, less allowances of $361 and $395 .      24,642       25,320
     Inventories ..................................................      31,680       28,396
     Deferred income taxes ........................................       8,943       11,714
     Other current assets .........................................       1,303        1,787
     Net current assets of subsidiaries distributed to shareholders        --         58,047
     Net current assets of discontinued operations ................        --         36,226
                                                                      ---------    ---------
TOTAL CURRENT ASSETS ..............................................      79,674      162,622

Restricted Cash ...................................................      56,026         --

PROPERTY, PLANT AND EQUIPMENT:
     Land .........................................................         672          672
     Buildings and Improvements ...................................      11,015       12,585
     Machinery and Equipment ......................................      54,529       51,306
                                                                      ---------    ---------
                                                                         66,216       64,563
    Accumulated Depreciation ......................................     (22,137)     (17,534)
                                                                      ---------    ---------
                                                                         44,079       47,029
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS
   ACQUIRED, NET ..................................................      22,020       21,075
OTHER ASSETS ......................................................       9,393        7,328
NET NON - CURRENT ASSETS OF SUBSIDIARIES DISTRIBUTED
  TO SHAREHOLDERS .................................................        --        170,295
NET NON - CURRENT ASSETS OF DISCONTINUED OPERATIONS ...............        --         71,651
                                                                      ---------    ---------
TOTAL ASSETS ......................................................   $ 211,192    $ 480,000
                                                                      =========    =========

</TABLE>
See accompanying notes


<PAGE>
<TABLE>

                     LYNCH CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEET
                               (In Thousands)
<CAPTION>

                                                           December 31      December 31
                                                               1999             1998
CURRENT LIABILITIES
<S>                                                         <C>          <C>
   Notes payable to banks ...............................   $  23,178    $  59,686
   Trade accounts .......................................      14,404       18,178
   Accrued interest payable .............................       2,426        2,575
   Accrued liaiblites ...................................      13,956        3,580
   Customer advances ....................................         860        2,406
   Current maturities of long-term debt .................       1,636        2,027
   Net current liabilities of subsidiaries
     distributed to shareholders.........................        --         37,240
   Net current liabilities of discontinued operations ...        --         18,162
                                                            ---------    ---------
TOTAL CURRENT LIABILITIES ...............................      56,460      143,854

LONG-TERM DEBT ..........................................     116,765      126,976
DEFERRED INCOME TAXES ...................................       6,225       11,715
OTHER LONG-TERM LIABILITIES .............................       4,866        2,182
MINORITY INTERESTS ......................................      10,885        3,999
NET NON-CURRENT LIABILITIES OF SUBSIDIARIES
  DISTRIBUTED TO SHAREHOLDERS ...........................        --        147,600
NET NON-CURRENT LIABILITIES OF DISCONTINUED
   OPERATIONS ...........................................        --          3,881


COMMITMENT AND CONTINGINCIES

SHAREHOLDERS' EQUITY
  COMMON STOCK, NO PAR VALUE - 10,000,000 SHARES
    AUTHORIZED; 1,471,191 shares issued (at stated value)       5,139        5,139
  ADDITIONAL PAID-IN CAPITAL ............................       8,302        8,554
  RETAINED EARNING ......................................       3,843       26,771
  ACCUMULATED OTHER COMPREHENSIVE INCOME(LOSS) ..........         (40)          59
  TREASURY STOCK OF 61,008 AND 52,943 SHARES AT COST ....      (1,253)        (730)
                                                            ---------    ---------
                                                               15,991       39,793
                                                            ---------    ---------
                                                            $ 211,192    $ 480,000
                                                            =========    =========
</TABLE>
See accompanying notes


<PAGE>
<TABLE>

                      LYNCH CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except share amounts)
<CAPTION>

                                                                    Years Ended December 31
                                                               1999           1998           1997
<S>                                                        <C>            <C>            <C>
SALES AND REVENUES .....................................   $   194,222    $   187,644    $   153,735


Costs and expenses:
   Manufacturing .......................................       172,567        162,735        126,570
   Selling and Administrative ..........................        21,570         20,835         20,435
                                                           -----------    -----------    -----------
  OPERATING PROFIT .....................................            85          4,074          6,730

Other Income (expense):
  Investment Income ....................................         2,354            199            305
  Interest Expense .....................................       (11,882)        (8,591)        (5,189)
  Gain on Sale of Stock by Subsidiary ..................          --            2,090            (91)
                                                           -----------    -----------    -----------
                                                                (9,528)        (6,302)        (4,975)
                                                           -----------    -----------    -----------

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
  INCOME TAXES, MINORITY INTERESTS, DISCONTINUED
  OPERATIONS AND EXTRAORDINARY ITEM ....................        (9,443)        (2,228)         1,755

Benefit (provision) for income taxes ...................         2,544          1,408           (301)
Minority interests .....................................         2,647          1,107           (121)
                                                           -----------    -----------    -----------

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEM .........        (4,252)           287          1,333

DISCONTINUED OPERATIONS:
 Income (loss) from operations of Lynch Interactive
 Corporation distributed to shareholders (less income
 Tax (provision) benefit of $3,068, ($5,012), and $736
 and minority interests of $578, $1,226, and $714)......        (7,493)         4,929         (3,349)

(Loss) from discontinued operations of Industrial
  tape segment (less income tax benefit of $308,
  $2,192, and $226 and minority interests of $558,
  $1,429, and $239) ....................................          (572)        (1,859)          (862)


Gain on sale of Industrial tape segment
 (less income tax provision of $6,495 and
  minority interest of $7,013) .........................        10,431           --             --

EXTRAORDINARY ITEM:
  Gain on early extinguishment of debt (less
  income tax provision of $355 and minority
  interest of $300) ....................................           303           --             --
                                                           -----------    -----------    -----------
NET INCOME (LOSS) ......................................   $    (1,583)   $     3,357    $    (2,878)
                                                           ===========    ===========    ===========
Weighted average shares outstanding ....................     1,415,000      1,418,000      1,415,000

Basic and diluted earnings (loss) per share:

Income (loss) from continuing operations
 before discontinued operations ........................   $     (3.00)   $       .20    $      0.94
Income (loss) from operations of
   Lynch Interactive Corporation .......................         (5.30)          3.48          (2.36)
Income (loss) from gain on sale and operations
  of industrial tape segement ..........................          6.97          (1.31)         (0.61)
Extraordinary item .....................................           .21           --             --
                                                           -----------    -----------    -----------
NET INCOME (LOSS) ......................................   $     (1.12)   $      2.37    $     (2.03)
                                                           ===========    ===========    ===========
</TABLE>

Accmpanying notes

<PAGE>

<TABLE>


                       Lynch Corporation and Subsidiaries
                 Consolidated Statements of Shareholders' Equity
                   For the Three Years Ended December 31, 1999
                 (In Thousands except for shares of common stock)
<CAPTION>

                                                                                    ACCUMULATED
                                                             ADDITIONAL                OTHER
                             SHARES OF COMMON   COMMON        PAID-IN    RETAINED  COMPREHENSIVE     TREASURY
                            STOCK OUTSTANDING   STOCK         CAPITAL    EARNINGS      INCOME          STOCK         TOTAL
                               ------------   ----------   -----------   ------------ ------------  ----------      ---------
<S>                              <C>          <C>          <C>             <C>          <C>          <C>
BALANCE AT DEC 31, 1996 .....    1,391,034    $    5,139   $    8,417      $  26,472         --      $   (1,105)     $ 38,923
Issuance of Treasury Stock ..       26,014          --            313          --            --             359           672
Capital transactions of The
 Morgan Group, Inc.                   --            --            (86)         --            --            --             (86)
Dividend of East/West
 Communications, Inc.                 --            --           --            (180)         --            --            (180)
Net income (loss) for year ..         --            --           --          (2,878)         --            --          (2,878)
                                ----------    ----------   ----------    ----------    ----------    ----------    ----------
BALANCE AT DEC 31, 1997 .....    1,417,048         5,139        8,644        23,414          --            (746)       36,451
Issuance of Treasury Stock ..        1,200          --             74          --            --              16            90
Capital transactions of The
 Morgan Group, Inc.                   --            --          (164)          --            --            --            (164)
Net income (loss) for year ..         --            --           --           3,357          --            --           3,357
Other comprehensive income             --            --           --            --              59          --              59
                                ----------    ----------   ----------    ----------    ----------    ----------    ----------
BALANCE AT DEC 31, 1998 .....    1,418,248         5,139        8,554        26,771            59          (730)       39,793
   Purchase of Treasury Stock       (8,065)         --             --          --            --            (523)         (523)
Capital transactions of The
 Morgan Group, Inc.                   --            --          (252)          --            --            --            (252)
Dividend of Lynch
   Interactive Corporation           --            --           --         (21,345)          (59)          --         (21,404)
Net income (loss) for year           --            --           --          (1,583)          --            --          (1,583)
Other comprehensive income           --            --           --             --            (40)          --             (40)
                                ----------    ----------   ----------    ----------    ----------    ----------    ----------
BALANCE AT DEC 31, 1999 .....    1,410,183    $    5,139   $    8,302    $    3,843    $      (40)   $   (1,253)   $   15,991
                                ----------    ----------   ----------    ----------    ----------    ----------    ----------
</TABLE>


<PAGE>
<TABLE>

                      LYNCH CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

(In Thousands)                                                                Years Ended December 31
                                                                    -----------------------------------------
                                                                            1999      1998          1997
                                                                    -----------------------------------------
OPERATING ACTIVITIES
<S>                                                                     <C>            <C>          <C>
Net income (loss)                                                        ($1,583)      $3,357       ($2,878)
Adjustments to reconcile net income (loss) to net
   cash provided by operating activities of continuing operations:
Adjustment from discontinued operations:
   (Income) loss from operations of Lynch Interactive Corporation          7,493       (4,929)        3,349
   Loss from operations of industrial tape segment                           572        1,859           862
   Gain on sale of industrial tape segment                              (10,431)            -             -
Extraordinary item                                                         (303)            -             -
   Depreciation and amortization                                           6,234        5,165         3,216
   Amortization of deferred financing charges                                786          771           632
   Gain on sale of stock by subsidiary corporation                            --       (4,778)         (169)
   Deferred taxes                                                         (2,719)      (1,488)       (1,279)
   Minority interests                                                     (2,636)      (2,536)         (367)
   Gain on sale of fixed assets                                             (854)           -              -
   Changes in operating assets and liabilities:
       Receivables                                                           678        2,560          1,959
       Inventories                                                       (3,284)        2,270             22
       Accounts payable and accrued liabilities                          (3,949)        8,317         (3,450)
       Other                                                                 864         (728)          (479)
                                                                    -------------   ----------   ------------

Cash provided by operating activities of continuing operations            (9,132)       9,840          1,418
                                                                    -------------   ----------   ------------

INVESTING ACTIVITIES

Capital Expenditures                                                     (3,795)      (3,297)        (3,231)
Investment in Spinnaker Coating - Maine                                        -     (47,933)              -
Proceeds from sale of industrial tape segment                            104,450            -              -
Proceeds from sale of fixed assets                                         2,403        2,696              -
Other                                                                        509        (128)        (1,339)
                                                                    -------------   ----------   ------------

Cash provided by (used in) investing activities of
   continuing operations                                                 103,567     (48,662)        (4,570)
                                                                    -------------   ----------   ------------

FINANCING ACTIVITIES

Net borrowings (repayments) of notes payable                            (36,127)       42,268          1,121
Issuance of long-term debt                                                     -        6,025          1,262
Repayment of long-term debt                                             (10,937)      (1,954)        (1,991)
Deferred financing costs                                                   (580)        (726)              -
(Purchase) sale of treasury stock                                          (523)           90            672
Other                                                                          -        (841)            755

                                                                    -------------   ----------   ------------
Cash provided by (used in) financiging activities of
   continuing operations                                                (48,167)       44,862          1,819
                                                                    -------------   ----------   ------------

Net increase (decrease) in cash and cash equivalents                      46,268        6,040        (1,333)
Cash provided by (used by) Lynch Interactive Corporation                  15,987       (1,880)          (557)
Cash provided by (used by) industrial tape segment                         5,745      (7,025)            864
                                                                    -------------  -----------   ------------

Increase (decrease) in cash and cash equivalents                          68,000      (2,865)        (1,026)
Cash and cash equivalents at beginning of period                           1,132        3,997          5,023
                                                                    -------------   ----------   ------------

Cash and cash equivalents at end of period, including
   $56,026 of Restricted Cash at December 31, 1999                       $69,132       $1,132         $3,997
                                                                    =============   ==========   ============
</TABLE>
                       Lynch Corporation and Subsidiaries
                   Notes to Consolidated Financial Statements
                               December 31, 1999

1.       Accounting and Reporting Policies

Principles of Consolidation

The consolidated  financial statements include the accounts of Lynch Corporation
(the "Company" or "Lynch") and entities in which it has majority voting control.
All material  intercompany  transactions  and accounts  have been  eliminated in
consolidation.  See Note 4 for  details  of the  spin  off of Lynch  Interactive
Corporation which occurred on September 1, 1999.

Uses of Estimates

The  preparation  of  consolidated   financial  statements  in  conformity  with
accounting   principles   generally  accepted  in  the  United  States  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.

Cash Equivalents

Cash  equivalents  consist of highly liquid  investments with a maturity of less
than three months when purchased.

At December 31, 1999 and 1998,  assets of $1.1 million and $1.3  million,  which
are  classified  as cash and cash  equivalents,  are  invested in United  States
Treasury  money  market  funds  for which  affiliates  of the  Company  serve as
investment managers to the respective funds.

Restricted Cash

At  December  31,  1999 the Company  had $56  million of  Restricted  Cash.  See
discussion of Restricted Cash in Note 6 - Notes Payable and Long-Term Debt.

Property, Plant and Equipment

Property,  plant and equipment are recorded at cost and include expenditures for
additions  and major  improvements.  Maintenance  and  repairs  are  charged  to
operations  as  incurred.  Depreciation  is  computed  for  financial  reporting
purposes using the  straight-line  method over the estimated useful lives of the
assets,  which  range  from 3  years  to 35  years.  For  income  tax  purposes,
accelerated depreciation methods are used.

Excess of Cost over Fair Value of Net Assets of Companies Acquired

Excess of cost over fair value of net assets of companies acquired (goodwill) is
being  amortized on a  straight-line  basis over periods  ranging from twenty to
forty years. The Company periodically reviews goodwill to assess recoverability,
and  impairments  would  be  recognized  in  operating  results  if a  permanent
diminution in value were to occur. The Company measures the potential impairment
of recorded goodwill by the undiscounted  value of expected future cash flows in
relation to its net capital  investment in the subsidiary.  Based on its review,
the Company does not believe that an  impairment  of its goodwill has  occurred.
Excess  of cost over  fair  value of net  assets  acquired  include  acquisition
intangibles of $23.4 million and $21.6 million, net of accumulated  amortization
of $1,391,000 and $574,000 at December 31, 1999 and 1998, respectively.

Revenue Recognition

Revenues, with the exception of certain long-term contracts discussed below, are
recognized on shipment.

Research and Development Costs

Research and development costs are charged to operations as incurred. Such costs
were $571,000, $1,030,000, and $1,022,000 in 1999, 1998, and 1997, respectively.

Earnings Per Share

In 1997, the Company  adopted  Financial  Accounting  Standards  Board Statement
("SFAS") No. 128, "Earnings Per Share". SFAS No. 128 replaced the calculation of
primary and fully diluted earnings per share with basic and diluted earnings per
share.  Unlike primary earnings per share, basic earnings per share excludes any
dilutive  effects of options,  warrants,  and  convertible  securities.  Diluted
earnings per share are very similar to the  previously  reported  fully  diluted
earnings  per share.  The  Company's  basic and diluted  earnings  per share are
equivalent as the Company has no dilutive securities.

Segment Information

Effective  December 1998, the Company adopted SFAS No. 131,  "Disclosures  About
Segments of an Enterprise and Related Information". SFAS No. 131 superseded SFAS
No. 14, "Financial  Reporting for Segments of a Business  Enterprise".  SFAS No.
131  establishes  new  standards  for  reporting   information  about  operating
segments. SFAS No. 131 requires disclosure of selected financial and descriptive
information  for  each  operating   segment  based  on   management's   internal
organizational decision-making structure.  Additional information is required on
a  company-wide  basis  for  revenues  by  product  or  service,   revenues  and
identifiable  assets by geographic  location and information  about  significant
customers.  The adoption of SFAS No. 131 did not affect results of operations or
financial position, but did affect the disclosure of segment information.  Prior
year amounts have been  reclassified to conform to the  requirements of SFAS No.
131. See Note 14.

Pension and Other Post-Retirement Benefits

In February 1998,  the FASB issued SFAS No. 132,  "Employers  Disclosures  About
Pensions  and Other  Post-Retirement  Benefits",  which is an  amendment to SFAS
No.'s 87, 88, and 106. This SFAS revises  employers'  disclosures  about pension
and other post-retirement  benefits plans. It does not change the measurement or
recognition of those plans.  The adoption of SFAS No. 132 in 1998 did not have a
significant  impact on the Company's  consolidated  financial  statements as the
Company's benefit plans are not material.

Accounting for Long-Term Contracts

Lynch  Systems,  Inc., a 91% owned  subsidiary  of the Company is engaged in the
manufacture   and   marketing  of   glass-forming   machines   and   specialized
manufacturing  machines.  Certain  sales  contracts  require an advance  payment
(usually  15% of the  contract  price)  which  is  accounted  for as a  customer
advance.  The contractual  sales prices are paid either (i) as the manufacturing
process  reaches  specified  levels of  completion or (ii) based on the shipment
date. Guarantees by letter of credit from a qualifying financial institution are
required for most sales  contracts.  Because of the specialized  nature of these
machines  and the period of time needed to  complete  production  and  shipping,
Lynch Systems  accounts for these contracts  using the  percentage-of-completion
accounting method as costs are incurred. At December 31, 1999 and 1998, costs in
excess of billings were $95,000 and $0, respectively.

Impairments

The Company accounts for impairments of long-lived assets in accordance with the
provisions of SFAS No. 121,  "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of". The Company periodically  assesses
the net realizable value of its long-lived  assets and evaluates such assets for
impairment  whenever  events or changes in  circumstances  indicate the carrying
amount  of an asset  may not be  recoverable.  For  assets  to be held and used,
impairment is determined  to exist if estimated  undiscounted  future cash flows
are less than the carrying amount.  For assets to be disposed of,  impairment is
determined  to exist if the  estimated  net  realizable  value is less  than the
carrying amount.

Stock Based Compensation

The  Company  accounts  for stock  based  compensation  in  accordance  with the
provisions of SFAS No. 123, "Accounting for Stock Based Compensation".  SFAS No.
123  establishes a fair value method of accounting  and reporting  standards for
stock based  compensation  plans.  However as  permitted  by SFAS No.  123,  the
Company has elected to continue to apply the provisions of Accounting Principles
Board Opinion  ("APB") No. 25, if the exercise  price of the Company's  employee
stock options was not less than the market price of the underlying  stock on the
date of grant, no compensation expense is recognized. The Company is required to
disclose the pro forma net income  (loss) and net income  (loss) per share as if
the fair value  method  defined  in SFAS No. 123 had been  applied to all grants
made on or after January 1, 1995. See Note 8 for pro forma disclosures.

Fair Value of Financial Instruments

Cash and cash equivalents,  trade accounts  receivable,  short-term  borrowings,
trade  accounts  payable  and  accrued  liabilities  are  carried  at cost which
approximates fair value due to the short-term maturity of these instruments. The
carrying account of the Company's borrowings under its revolving lines of credit
approximates  fair value, as the  obligations  bear interest at a floating rate.
The  fair  value of  other  long-term  obligations  approximates  cost  based on
borrowing  rates for similar  instruments,  excluding the Spinnaker  Industries,
Inc. ("Spinnaker")  senior-secured debt with a carrying value of $109 million at
December  31,  1999 and $115  million at  December  31, 1998 and a fair value of
between $87.8 million and $92.3 million,  and $100.1 million,  respectively,  at
December 31, 1999 and 1998, based on quoted market prices.

Issuance of Stock by Subsidiaries and Investees

Changes  in the  Company's  equity  in a  subsidiary  or an  investee  caused by
issuance of the  subsidiary's or investees'  stock are accounted for as gains or
losses where such issuance is not part of a broader reorganization (see Note 9).

Reclassifications

The consolidated  financial statements reflect the spin off of Lynch Interactive
Corporation  (Interactive)  from Lynch  Corporation  that  occurred in the third
quarter of 1999 and also the sale by Spinnaker Industries,  Inc. (Spinnaker), of
its two industrial tape units, Central Products Company and Spinnaker Electrical
that also  occurred in the third  quarter of 1999.  Accordingly,  the  operating
results of both Interactive and the industrial tape segment have been segregated
from  continuing  operations  of the Company and are  reported as separate  line
items on the financial  statements as discontinued  operations.  The comparative
amounts  for 1998 and  1997  have  also  been  restated  to  reflect  the  above
transactions.

Certain  other  amounts  in the 1998 and 1997  financial  statements  have  been
reclassified to conform to the 1999 presentation.  These other reclassifications
are immaterial to the consolidated financial statements taken as a whole.

Recent Accounting Pronouncements

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities",  which  is
required  to be adopted in years  beginning  after June 15,  2000.  SFAS No. 133
requires the Company to recognize all  derivatives  on the balance sheet at fair
value.  Derivatives  that are not hedges must be adjusted to fair value  through
income.  If the  derivative  is a hedge,  depending  on the nature of the hedge,
changes in fair value are either  offset  against  the  changes in fair value of
assets and  liabilities  through  earnings or recognized in other  comprehensive
income until the hedged item is recognized in earnings. Because of the Company's
minimal use of derivatives,  management does not anticipate that the adoption of
SFAS No.  133 will  have a  significant  effect  on its  earnings  or  financial
position.

2.       Acquisitions

On July 31, 1998,  the  Company's  subsidiary,  Spinnaker,  acquired  tesa tape,
Inc.'s  pressure-sensitive  electrical tape product line and its Carbondale,  IL
manufacturing plant (the "Spinnaker Electrical Acquisition"). The purchase price
totaled $10.7  million,  comprised of 200,000  shares of Spinnaker  common stock
(subject to adjustment) valued at $3.7 million,  $4.5 million in term debt, $2.0
million in cash, and a $0.5 million  subordinated  note.  The acquired  business
produces  electrical  tape for insulating  motors,  coils and  transformers  for
customers  in Europe,  Canada and the U.S.  This company was  subsequently  sold
within the industrial tape segment. See Note 3 - Discontinued Operations.

On March 17, 1998, Spinnaker  Coating-Maine,  Inc., a wholly owned subsidiary of
Spinnaker,  acquired the assets of the pressure-sensitive  adhesive-backed label
stock  business of S. D. Warren (the "S.D.  Warren  Acquisition").  The purchase
price  was  approximately   $51.8  million,   plus  the  assumption  of  certain
liabilities  and  transaction  costs,  and was  funded by  issuing  the seller a
convertible  subordinated  note of $7.0  million  with the  remainder  funded by
Spinnaker's  revolving credit  facility.  As a result of this  transaction,  the
Company  recorded  approximately  $23.1  million  in  goodwill  which  is  being
amortized over 30 years.

All of the above acquisitions were accounted for as purchases,  and accordingly,
the assets  acquired and  liabilities  assumed were recorded at their  estimated
fair market  values on their  respective  dates of  acquisition.  The  operating
results of the acquired companies are included in the Consolidated Statements of
Operations  from their  respective  acquisition  dates  except for the tesa tape
acquisition, which is included in discontinued operations.

The following unaudited pro forma information shows the results of the Company's
operations  presented  as if  the S.  D.  Warren  Acquisition  was  made  at the
beginning  of 1997.  The  unaudited  pro forma  information  is not  necessarily
indicative  of the  results  of  operations  that would  have  occurred  had the
transactions  been made at that date nor is it necessarily  indicative of future
results of operations.
<TABLE>
<CAPTION>

                                        For the years ended December 31
                                    (In thousands, except per share amounts)
                                             1998        1997

<S>                                        <C>         <C>
Sales ..................................   $ 199,758   $ 217,614
                                           =========   =========
Income (loss) from continuing operations   $  (3,053)  $   2,274
                                           =========   =========

Net income (loss) ......................   $   3,197   $  (1,937)
                                           =========   =========
Basic and diluted earnings per share:
Income (loss) from continuing operations   $   (2.15)  $    1.61
                                           =========   =========

Net income (loss).......................   $    2.25   $   (1.37)
                                           =========   =========
</TABLE>



3.       Discontinued Operations

On April 9, 1999,  Spinnaker  entered  into a  definitive  agreement to sell its
industrial  tape  segment  to  Intertape  for  approximately  $105  million  and
five-year  warrants to purchase  300,000  shares of Intertape  common stock (New
York Stock Exchange Symbol "ITP") at an exercise price of $29.50 per share.  The
warrants  were valued at  approximately  $3.0  million  using the  Black-Scholes
option pricing model and are reflected in other assets.  Accordingly,  operating
results of the  industrial  tape segment have been  segregated  from  continuing
operations and reported as a separate line item on the statement of operations.

The sale of the two  industrial  tape  businesses  closed on August 10, 1999 and
July 30, 1999, respectively.  The Company recorded gains totaling $17.4 million,
net of applicable income taxes of approximately  $6.5 million.  Spinnaker offset
the cash tax liability by utilizing net operating loss carry forwards.

The Company has restated its prior financial statements to present the operating
results  of  the  industrial  tape  segment  as a  discontinued  operation.  The
industrial tape segment net sales were $69.5 million,  $121.8 million and $119.7
million for the periods ended December 31, 1999 (through the date of sale), 1998
and 1997, respectively.

General  corporate  office  expenses  related  to  finance  and   administrative
functions  including  public  company  compliance  reporting,  bank and investor
relations,   taxes  other  than  income  taxes  and  holding  company   payroll,
historically  allocated and charged to the industrial tape segment were reversed
and allocated back to continuing operations.  These expenses were not considered
to be  directly  attributed  to  discontinued  operations.  Historical  expenses
allocated back to continuing  operations totaled $1.0 million,  $1.5 million and
$0.9  million  in  the  periods  ended   December  31,  1999,   1998  and  1997,
respectively.

Interest expense  attributed to the Senior Notes and related deferred  financing
has  historically  been allocated based on the pro rata share of subsidiary debt
obligations  retired with the proceeds from the issuance of the Senior Notes, to
total debt obligations retired. The Senior Note proceeds were used to extinguish
certain  outstanding  term and revolver  obligations  in October 1996.  Interest
expenses  charged to the  discontinued  industrial  tape  segment  totaled  $5.2
million for the period  ended  December 31, 1999 and $8.5 million in the periods
ended December 31, 1998 and 1997.

The assets and liabilities of the industrial tape segment of Spinnaker  included
in the accompanying  consolidated  balance sheet at December 31, 1998 consist of
the following (in thousands):
<TABLE>

<S>                                                   <C>
Accounts receivable, net ..........................   $14,815
Inventories, net ..................................    18,167
Prepaids and other ................................     3,244
                                                      -------
Current assets of discontinued operations .........   $36,226
                                                      =======

Property, plant and equipment, net ................   $48,312
Goodwill and other assets .........................    23,339
                                                      -------
Non-current assets of discontinued operations .....   $71,651
                                                      =======

Accounts Payable ..................................   $13,720
Accrued liabilities ...............................     4,442
                                                      -------

Current liabilities of discontinued operations ....   $18,162
                                                      =======

Non-current liabilities  of discontinued operations   $ 3,881
                                                      =======
</TABLE>


4.           Spin Off

On August 12, 1999,  the Board of Directors  approved a plan to  distribute  the
stock  of  Lynch  Interactive  Corporation  on  a  one  for  one  basis  to  the
shareholders of Lynch Corporation  ("spin off"). Lynch completed the spin off of
Lynch  Interactive   Corporation   ("Interactive")  on  September  1,  1999,  to
stockholders of record on August 23, 1999.  Pursuant to the spin off, each Lynch
shareholder  received  one share of  Interactive  common stock for each share of
Lynch  owned.  Lynch had  received a private  letter  ruling  from the  Internal
Revenue  Service  that  the spin  off  would be tax free to Lynch  shareholders.
Interactive is listed on the American Stock Exchange under the symbol "LIC".

Interactive  owns all of what were  Lynch's  multimedia  and service  businesses
while  Lynch  retained  the  manufacturing  businesses.   Interactive  owns  the
telephone companies,  television interests and PCS interests, as well as the 55%
equity interest of The Morgan Group, Inc. In addition,  Interactive owns a 13.6%
equity interest in Spinnaker Industries, Inc. Lynch owns a 47.6% equity interest
in Spinnaker (60.4% of voting interest),  as well as 100% of M-tron  Industries,
Inc. and 92% of Lynch Systems, Inc.

As a result,  the Company's  multimedia and services segments are being reported
as operations  distributed  to  shareholders  in the  accompanying  consolidated
financial  statements.  Accordingly,  operating  results  of  Lynch  Interactive
Corporation  have been segregated  from continuing  operations and reported as a
separate line item on the statements of operations.

Lynch has restated its prior year financial  statements to present the operating
results of the Company on a  comparable  basis.  Interactive's  net sales were $
204.6  million,  $205.2  million,  and $194.1 million for the fiscal years ended
December 31, 1999, 1998, and 1997, respectively.

In the third  quarter of 1999,  Lynch  acquired  by merger,  all of the stock of
Central Scott Telephone  Company.  This company became part of Lynch Interactive
and was included in the spin off.

Lynch  Interactive  and Lynch have  entered into  certain  agreements  governing
various ongoing relationships, including the provision of support services and a
tax  allocation  agreement.  The  tax  allocation  agreement  provides  for  the
allocation of tax  attributes  to each company as if it had actually  filed with
the respective  tax  authority.  At the spin off, the employees of the corporate
office  of  Lynch   Corporation   became  the  employees  of  Lynch  Interactive
Corporation and Lynch  Interactive  Corporation  began providing certain support
services to Lynch.  The Company was charged a management  fee for these services
amounting to approximately $200,000 in 1999.

The net assets of Interactive  included in the accompanying audited consolidated
balance sheet as of December 31, 1998 consist of the following: (in thousands)

<TABLE>

<S>                                                          <C>
Cash, cash equivalents and marketable securities .........   $ 27,988
 Accounts receivable, net ................................     18,853
Deferred income taxes ....................................      4,265
Prepaid expenses and other ...............................      6,941
                                                             --------
Current assets of subsidiaries distributed to shareholders   $ 58,047
                                                             ========

Property,  plant and  equipment,  net ....................   $ 91,183
Goodwill .................................................     47,740
Investment  in and  advances to PCS license  holders .....     23,360
Other  assets ............................................      8,012
                                                             --------
Non-current  assets of subsidiaries
  distributed to  shareholders ...........................   $170,295
                                                             ========

Notes payable ............................................   $  2,037
Accounts payable .........................................      4,662
Accrued liabilities ......................................     21,902
Current portion of long term debt ........................      8,639
                                                             --------
Current liabilities of subsidiaries
  distributed to shareholders ............................   $ 37,240
                                                             ========

Long Term Debt............................................   $119,024
Deferred income tax ......................................     13,062
Other  long term debt ....................................      4,987
Minority interest ........................................     10,527
                                                             --------
Non-current liabilities and
 minority interest of subsidiaries
 distributed to shareholders .............................   $147,600
                                                             ========
</TABLE>

The net assets distributed to interactive were estimated to be $ 23.0 million at
September 1, 1999. Such amount was subsequently  decreased in the fourth quarter
by $1.6 million to reflect revised estimates of liabilities distributed.

5.           Inventories

Inventories are stated at the lower of cost or market value.  Inventories valued
using the last-in, first-out (LIFO) method comprised approximately 12% and 9% of
consolidated   inventories   at  December  31,  1999  and  1998,   respectively.
Inventories  at Spinnaker  Coating,  80% and 82% of  inventories at December 31,
1999 and  1998,  respectively,  are  valued  using the  specific  identification
method.  The  balance of  inventories  are valued  using the  first-in-first-out
(FIFO) method.
<TABLE>
<CAPTION>
                               December 31
                             1999        1998
                              (In Thousands)

<S>                          <C>       <C>
Raw materials and supplies   $10,407   $ 7,711
Work in progress .........     2,114     1,273
Finished goods ...........    19,159    19,412
                             -------   -------
   Total .................   $31,680   $28,396
                             =======   =======
</TABLE>

Current cost exceeded the LIFO value of  inventories by $829,000 and $880,000 at
December 31, 1999 and 1998, respectively.

6.           Notes Payable and Long-term Debt
<TABLE>

Long-term debt consists of (all interest rates are at December 31, 1999):
<CAPTION>
                                                                                 December 31
                                                                                1999     1998
                                                                               (In Thousands)

<S>                                                                       <C>          <C>
Spinnaker Industries, Inc. 10.75% Senior
   Secured Notes due 2006 ..............................................   $ 108,585    $ 115,000
Unsecured note issued in connection with
   acquisition at a fixed interest rate of 10% .........................       7,000        7,500
Other ..................................................................       2,816        6,503
                                                                           ---------    --------
                                                                             118,401     129,003
Current maturities .....................................................      (1,636)      (2,027)
                                                                           ---------    --------
                                                                           $ 116,765    $126,976
                                                                           =========    ========
</TABLE>

On October 23, 1996,  Spinnaker completed the issuance of $115,000,000 of 10.75%
senior-secured  debt  due  2006.  The  debt  proceeds  were  used to  extinguish
substantially  all  existing  bank  debt,  bridge  loans  and lines of credit at
Spinnaker  and  its two  major  operating  subsidiaries,  Central  Products  and
Spinnaker  Coating.  Financing  costs were incurred by Spinnaker in  conjunction
with the  issuance  of the  10.75%  senior  secured  notes and  other  financing
activities.  These  financing  costs are deferred and amortized over the term of
the related debt.  Unamortized  financing costs of $5.4 million and $5.7 million
at December 31, 1999 and 1998, respectively, are included in other assets.

The notes are redeemable,  in whole or in part, at the option of Spinnaker on or
after  October 15,  2001,  at  redemption  prices  beginning  at 105.375% of the
principal  amount declining to 100% of the principal amount on October 15, 2005,
plus  accrued and unpaid  interest.  The notes are  unconditionally  guaranteed,
jointly and severally, by Spinnaker's subsidiaries, Spinnaker Coating, Inc., and
Entoleter, Inc.

Spinnaker  completed  the sale of Central  Products on August 10, 1999 and $18.2
million of the proceeds were used to repay the working  capital  revolver  debt.
Any net cash proceeds from the sale of Central Products ("Restricted  Proceeds")
not invested in any business within 270 days after the sale of Central  Products
or not used  within that time to  permanently  reduce  indebtedness  (other than
subordinated debt) shall be deemed to be excess proceeds.  At December 31, 1999,
the amount of net cash  proceeds,  which are restricted in their future use, has
been classified as Restricted Cash on the Company's balance sheet. If any excess
proceeds  exist  270 days  after  the sale of  Central  Products,  Spinnaker  is
obligated  to utilize  those  proceeds to make an offer to  purchase  the Senior
Notes at par plus accrued interest.

During the third and fourth quarters of 1999,  Spinnaker  Electrical purchased a
total of $6.4 million of the  outstanding  Senior Notes on the open market at an
average  price of 81.5% of par value.  The  Company  has  recorded a gain on the
early  extinguishment of debt of approximately  $303,000,  which amount has been
reduced by the write-off of a proportional  amount of deferred  financing  costs
and after giving effect to taxes and minority interest.

The proceeds from the sale of Spinnaker Electrical,  an unrestricted  subsidiary
under the Indenture,  were used to repay  approximately  $6.9 million of certain
term debt and working  capital  revolver  debt  collateralized  by the assets of
Spinnaker  Electrical.  The  remaining  net  proceeds  will be used for  general
corporate  purposes,  which  may  include  purchasing  Senior  Notes in the open
market.  Other options  include  acquisitions,  capital  expenditures,  and / or
repurchase  shares of Spinnaker  common stock.  Subsequent to December 31, 1999,
Spinnaker utilizing the Restricted Proceeds, purchased $33.4 million (par value)
of outstanding  Senior Notes on the open market at an average price of 83.6%. In
addition,  Spinnaker  purchased  all of the Senior Note  holdings  of  Spinnaker
Electrical at 81.5% of par value, plus accrued interest,  representing Spinnaker
Electrical's cost basis.

At  December  31,  1998,  the  Company  had two lines of credit  totaling  $20.0
million,  of which $4.9 million was available.  In conjunction with the spin off
of Lynch Interactive,  these credit facilities were transferred from the Company
to Interactive.

On a consolidated  basis, at December 31, 1999,  Lynch maintains  short-term and
long-term  line  of  credit  facilities   totaling  $43.7  million  (subject  to
limitations  that  reduce the  availability  to $35.4  million),  of which $12.3
million  was  available  for  future  borrowings.   Spinnaker  Industries,  Inc.
maintains lines of credit at its subsidiaries which in the aggregate total $40.0
million  (subject to limitations that reduce the availability to $32.0 million),
of which $11.5 million was available at December 31, 1999. These facilities,  as
well as facilities at other  subsidiaries  of Lynch,  generally limit the credit
available  under the lines of credit to certain  variables,  such as inventories
and receivables,  and are secured by the operating assets of the subsidiary, and
include  various  financial  covenants.  At December  31, 1999, $ 3.7 million of
these total  facilities  expire within one year and  subsequent to year-end were
extended to March of 2001.  The weighted  average  interest rate for  short-term
borrowings at December 31, 1999 was 8.05%. The Company pays fees ranging from 0%
to 0.375% on its unused lines of credit.

In general,  the long-term debt facilities are secured by  substantially  all of
the Company's property,  land and equipment,  inventory,  receivables and common
stock  of  certain  subsidiaries  and  contain  certain  covenants   restricting
distributions  to Lynch. At December 31, 1999, and 1998,  substantially  all the
subsidiaries' net assets are restricted.

Cash payments for interest were $10.6 million, $7.2 million and $4.8 million for
the years ended December 31, 1999, 1998 and 1997, respectively.

Aggregate principal maturities of long-term debt for each of the next five years
are as  follows:  2000 -- $ 1.6  million;  2001 -- $ .4  million;  2002 -- $ .4
million; 2003 -- $ 7.6 million and 2004 -- $0 million.

7.        Minority Interests and Related Party Transactions

On July 31, 1998,  Spinnaker  completed the  acquisition of the electrical  tape
division of tesa tape,  inc.  (see Note 2). A portion of the purchase  price was
200,000  newly  issued  shares of  Spinnaker  Class A common  stock  (subject to
certain  adjustments).  In accordance with the Company's  policy, as a result of
this  issuance,  the Company  recorded a pre-tax gain on the sale of  subsidiary
stock of $2.1 million in 1998.

On June 13, 1994, Spinnaker entered into a management agreement (the "Management
Agreement") with Boyle,  Fleming & Co., Inc. ("BF"),  of which a former Director
of the Company is a principal, to assume the management of Spinnaker.  Effective
August 31, 1996, the  Management  Agreement was terminated at which time Messrs.
Boyle and Fleming became  employees of Spinnaker.  Spinnaker and BF also entered
into a  Warrant  Purchase  Agreement  in 1994,  pursuant  to  which BF  received
warrants to purchase  common stock of Spinnaker  (equating to a 20% ownership of
Spinnaker  at that  time) at any time on or before  June 30,  1999,  subject  to
certain restrictions. The remaining warrants were exercised in January 1998. Mr.
Boyle is  currently  a member of the  Office  of the  Chairman  and Mr.  Fleming
remains President.

On October 23, 1996,  concurrent  with the  issuance of the $115 million  senior
notes (see Note 6),  Spinnaker  acquired the remaining 25% minority  interest in
its Spinnaker Coating subsidiary.  The terms of the acquisition  involved a cash
payment of  approximately  $2.3  million  and the  issuance  of 9,613  shares of
Spinnaker Common Stock. In addition, as part of the consideration for the shares
of capital stock of Spinnaker Coating,  the minority  shareholders  received the
right to a  contingent  payment,  which is  exercisable  at any time  during the
period  beginning  October 1, 1998 and ending September 30, 2000. The contingent
payment is based upon the  percentage  of the capital  stock owned by the former
Spinnaker Coating entity at the time of the merger multiplied by the fair market
value of the capital  stock of Spinnaker  Coating,  as  determined in accordance
with certain  economic  assumptions  and including an adjustment  for a minority
ownership  discount,  as  of  the  date  such  right  is  exercised,   less  the
consideration  received at closing.  The contingent price is payable through the
issuance  of  Common  Stock of  Spinnaker,  unless  Spinnaker  elects to pay the
contingent  price in cash.  If such  payments are made in cash,  they could give
rise  to  a  default  under  the  Senior  Notes,   unless  there  is  sufficient
availability  under provisions  regarding  restricted  payments contained in the
Senior  Notes.  The  amount  of  the  contingent   payment  is  currently  being
determined. Any contingent consideration paid in the future will be allocated to
goodwill.

In connection with the purchase of the Spinnaker Coating minority interest,  all
the  Spinnaker  Coating  options  were  accelerated  and  in  turn  certain  key
executives of Spinnaker Coating  management  exercised those options to purchase
71,065 shares of Spinnaker  Coating common stock at various prices between $7.16
and $14.69 per share,  for a total of approximately  $670,000.  The options were
originally  granted  in 1994 and were  issued  at not less than 100% of the fair
market value of the common stock at the date of grant.

8.           Stock Option Plans

In accordance with Spinnaker's  directors stock option plan, Spinnaker may grant
stock options to directors who are not employees of Spinnaker. In February 1996,
Spinnaker  granted  30,000  stock  options for the purchase of one share each of
Spinnaker  Class A Common Stock and  Spinnaker  Common Stock at a total price of
$40 per option  exercised  (adjusted  for the stock  dividend in August 1996) to
qualifying  directors.  The  options  vest over a two-year  period  with  15,000
options becoming  exercisable two years after the grant date. The options expire
on the fifth  anniversary  after the grant  date or 30 days  after the  director
ceases to be a director.  In January of 1997,  under the same  terms,  Spinnaker
issued  10,000 stock options for the purchase of one share of Common Stock at an
exercise price of $27 per share. As permitted by SFAS No. 123, Spinnaker elected
to  account  for these  options  under  APB No.  25 and as such no  compensation
expense was  recorded  because the option  exercise  price was not less than the
market  price  at  the  date  of  grant.  All of  these  options  are  currently
outstanding and exercisable.

Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been  determined  as if Spinnaker  had  accounted  for its
director stock options under the fair value method of that  statement.  The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions:  risk-free
interest rates of 6.09%-5.58%;  dividend yields of 0%, volatility factors of the
expected  market  price  of  the   Spinnaker's   common  stock  of  .50;  and  a
weighted-average  expected  life of the options of 3 years.  For purposes of pro
forma  disclosures,  the  estimated  fair value of the options is  amortized  to
expense over the options vesting  period.  The estimated  weighted-average  fair
value per  option  is  approximately  $14.62  and  $10.40  for the 1997 and 1996
options,  respectively.  The pro forma  effect on  Lynch's  1999,  1998 and 1997
operations is as follows (in thousands, except for per share amounts):
<TABLE>
<CAPTION>

                                            --------------------------------------------
                                                  1999          1998           1997
                                            --------------------------------------------
         <S>                                     <C>             <C>         <C>
         As reported:
            Net Income (loss)                    $ (1,583)       $ 3,357      $ (2,878)
            Per share:
               Basic                             $  (1.12)       $  2.37      $  (2.03)
               Diluted                              (1.12)          2.37         (2.03)
         Pro forma:
            Net income (loss)                    $ (2,832)       $ 3,326      $ (2,950)
            Per share:
               Basic                             $  (2.00)       $  2.35      $  (2.08)
               Diluted                              (2.00)          2.35         (2.08)

</TABLE>


9.           Shareholders' Equity

The Board of Directors has  authorized  the purchase of up to 400,000  shares of
Common Stock. Through December 31, 1999, 238,991 shares had been purchased at an
average cost of $14.88 per share.

In January  1994,  an officer was granted stock options to purchase up to 24,516
shares of Lynch common stock at an exercise price of $23.125,  the closing price
on the date of grant.  These  options were  exercised in January 1997 and shares
were issued from Treasury.

On  February  1, 1996,  the  Company  adopted a plan to provide a portion of the
compensation  for its directors in common  shares of the Company.  The amount of
common  stock is based upon the market  price at the end of the  previous  year.
Through December 31, 1999, 4,126 shares have been awarded under this program.

On February 29, 1996, the Company  adopted a Stock  Appreciation  Rights program
for certain employees. To date, 43,000 of Stock Appreciation Rights ("SAR") have
been granted at prices  ranging from $63 to $85 per share (pre spin off prices).
Upon the  exercise of a SAR, the holder is entitled to receive an amount in cash
equal to the amount by which the market value of the  Company's  common stock on
the exercise  date exceeds the grant price of the SAR.  Effective  September 30,
1998, the Company  amended the SAR Program so that the SAR's became  exercisable
only if the  market  price  for the  Company's  shares  exceeds  200% of the SAR
exercise  price  within  five years from  original  grant date.  This  amendment
eliminated  the recording of the profit and loss effect of the SAR's for changes
in the market price in the Company's common stock until it becomes probable that
the SAR's will become  exercisable.  The net income  (expense)  relating to this
program, prior to the time of the amendment,  was $185,000 in income in 1998 and
($439,000) of expense in 1997.

Subsequent to the spin off of Interactive,  the Company, with the concurrence of
the  holders  of all  outstanding  SAR units,  terminated  its SAR  program  for
corporate management, including all outstanding units, thus eliminating possible
future profit and loss and cash flow distortions  associated with the progam. As
a result of the  termination,  the Company  recorded  approximately  $700,000 of
related corporate expense in the fourth quarter.

10.           Income Taxes

The Company  files  consolidated  federal  income tax returns  which include all
subsidiaries  including  Interactive  through  the  date of the  spin  off,  but
excluding Spinnaker for all periods.


<PAGE>



Deferred  income  taxes  for  1999  and  1998  are  provided  for the  temporary
differences  between  the  financial  reporting  basis  and the tax basis of the
Company's  assets  and  liabilities.   Cumulative   temporary   differences  and
carryforwards at December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>

                                     December 31, 1999     December 31, 1998
(In thousands)                         Deferred Tax             Deferred Tax
                                Asset       Liability        Asset     Liability
<S>                              <C>        <C>         <C>        <C>
Inventory reserve ............   $  1,493       --      $    451       --
Fixed assets written up under
   Purchase accounting and
   Tax over book depreciation        --     $  6,782        --     $ 11,144
Discount on long-term debt ...       --         --          --       (1,783)
Basis difference in subsidiary
   and affiliate stock .......       --        1,105        --        1,123
Net operating losses of
Subsidiaries .................        850       --         7,166       --
Other reserves and accruals ..      6,600       --         1,622       --
Other ........................         --    (1,662)       2,475      1,231
                                  -------  --------     --------   --------
Total deferred income taxes ..   $  8,943   $  6,225      11,714   $ 11,715
                                 ========   ========    ========   ========

</TABLE>

Spinnaker has net operating loss  carryforwards of approximately $2.2 million at
December 31, 1999 which expire in 2018.

The  provision  (benefit)  for  income  taxes  from  continuing   operations  is
summarized as follows:
<TABLE>
<CAPTION>

(In Thousands)                                       1999       1998        1997
Current:
<S>                                                <C>        <C>        <C>
   Federal .....................................   $  (158)   $ 2,048    $ 5,171
   State and local .............................      --          921        250
                                                     -------    -------   ------
Deferred: ......................................      (158)     2,969      5,421
                                                     -------    -------   ------
   Federal .....................................    (2,386)    (3,435)    (5,069)
   State and local .............................      --         (942)       (51)
                                                    -------    -------   ------
                                                      (2,386)  (4,377)    (5,120)
                                                     -------    -------   ------
                                                     $(2,544)  $(1,408)   $  301
                                                     =======    =======   ======

</TABLE>






A  reconciliation  of the provision  (benefit) for income taxes from  continuing
operations and the amount computed by applying the statutory  federal income tax
rate to income before income taxes, minority interest and extraordinary item:
<TABLE>
<CAPTION>

(In Thousands)                                   1999        1998        1997

<S>                                             <C>        <C>        <C>
Tax at statutory rate .......................   $(3,211)   $  (757)   $   597
Increases (decreases):
State and local taxes, net of federal benefit      --         (288)       135
Amoritization of goodwill ...................        60         81        129
Operating losses of subsidiaries ............       164       (546)      (126)
Additional tax provision... .................       338       --         --
Other .......................................       105        102       (434)
                                                ------      ------      ------
                                                $(2,544)   $(1,408)   $   301
                                                 =======    =======    =======
</TABLE>


11.           Employee Benefit Plans

The  Company,  through  its  operating  subsidiaries,  has  several  and various
employee retirement type plans including defined benefit,  defined contribution,
multi-employer,  profit  sharing,  and 401 (k) plans.  The following  table sets
forth the consolidated expenses for these plans (dollars in thousands):
<TABLE>
<CAPTION>

(In Thousands)          1999      1998      1997

<S>                    <C>      <C>      <C>
Defined Contribution   $  561   $  643   $  839
Defined Benefit ....      166      150      473
Multi-Employer .....      121       80      173
                       ------   ------   ------
   Total ...........   $  848   $  873   $1,485

</TABLE>



The  Company's  most  significant  benefit plans are  maintained by  Spinnaker's
Coating business. Following are details of those plans:

The net  periodic  pension  cost for the year ended  December  31, 1999 and 1998
included the following components:
<TABLE>
<CAPTION>                                          1999      1999     1998     1998
                                                -------------------------------------
                                                Union   Non-Union   Union    Non-Union
                                                -------------------------------------

<S>                                                <C>      <C>      <C>     <C>
Service Cost - benefits earned during the period   $ 105    $ 137    $  69   $ 100
Interest cost on projected benefit obligation ..      21       51       11      50
Expected return on assets ......................      (6)      (9)    --      --
Recognized (gains) or losses ...................       1      (13)    --      --
                                                   -----    -----    -----   -----
Net periodic pension cost ......................   $ 121    $ 166    $  80   $ 150
                                                   -----    -----    -----   -----
</TABLE>

Theforegoing  measurement of net periodic pension cost is based on the following
   assumptions:

<TABLE>
<S>                                     <C>     <C>     <C>     <C>
Weighted-average discount rate ...      8.00%   8.00%   7.50%   7.50%
Weighted-average rate
   of compensation increase ......        N/A   4.00%     N/A   4.00%
Weighted-average expected
  long-term rate of return on plan      8.00%   8.00%   8.00%   8.00%
</TABLE>

The following table sets forth the union and non-union plans' benefit obligation
information as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
                                                   1999      1999        1998       1998
                                                  ----------------------------------------
                                                   Union    Non-Union    Union     Non-Union
                                                  -----------------------------------------
                                                             (In Thousands)
<S>                                                <C>        <C>        <C>       <C>
Benefit obligation at acquisition date .........   $   288    $ 1,081    $   186   $   835
Service cost - benefits earned during the period
                                                       106        137         69       100
Interest cost on projected benefit obligation ..        21         51         11        50
Actuarial (gains) losses .......................       (44)      (504)        22        96
Benefits paid ..................................        (1)        (2)      --        --
                                                   -------    -------    -------   -------
Benefit obligation at end of year ..............   $   370    $   763    $   288   $ 1,081
                                                   -------    -------    -------   -------

</TABLE>


There were no plan assets for the union and  non-union  plans as of December 31,
1999 and 1998.

The following  table sets forth the union and non-union  plans' funded status as
of December 31, 1999 and 1998:
<TABLE>
<CAPTION>

                                            1999      1999        1998        1998
                                          -----------------------------------------
                                          Union      Non-Union    Union     Non-Union
                                           ----------------------------------------
                                                      (In thousands)
<S>                                        <C>        <C>        <C>        <C>
Funded status ..........................   $  (173)   $  (481)   $  (288)   $(1,081)
Unrecognized actuarial (gains) losses
                                               (25)      (398)        22         96
                                           -------    -------    -------    -------
Net amount recognized ..................   $  (198)   $  (879)   $  (266)   $  (985)
                                           -------    -------    -------    -------
Amounts recognized in the balance sheet:
Net amount recognized ..................   $  (198)   $  (879)   $  (266)   $  (985)
                                           -------    -------    -------    -------
</TABLE>

Spinnaker Coating has a defined  contribution plan that covers substantially all
of  its  employees.  Under  the  plan,  Spinnaker  Coating  can  match,  at  its
discretion,  up to  50%  of  employee  contributions  not  exceeding  8% of  the
employee's  compensation.  Amounts  contributed to the plan by Spinnaker Coating
are 20% vested each year for five years. On the acquisition  date,  employees of
Spinnaker  Coating who were previously  employed by  Kimberly-Clark  Corporation
received   vesting   rights  based  on  the  years  of  credited   service  with
Kimberly-Clark   Corporation.   Spinnaker   Coating  recorded  expense  for  its
contributions under the plan of approximately  $542,000,  $559,000, and $442,000
in 1999, 1998 and 1997, respectively.

12.           Commitments and Contingencies

In the normal course of business  subsidiaries  of the Company are defendants in
certain  product  liability,  worker  claims and other  litigation  in which the
amounts being sought may exceed  insurance  coverage  levels.  The resolution of
these  matters  is not  expected  to have a  material  effect  on the  Company's
financial condition or operations.

Future minimum rental payments under long-term  non-cancelable  operating leases
are as follows at December 31, 1999 (in thousands):

<TABLE>
<S>                                                                     <C>
2000--------------------------------------------------------            $ 278
2001--------------------------------------------------------              256
2002--------------------------------------------------------              256
2003--------------------------------------------------------              283
2004--------------------------------------------------------              281
Thereafter--------------------------------------------------              200
                                                                        -------
                                                                       $1,554
</TABLE>

Rent expense under operating leases were  $1,222,000,  $952,000 and $416,000 for
the years ended  December 31,  1999,  1998 and 1997,  respectively.  The Company
leases  certain  property and  equipment,  including  warehousing  and sales and
distribution  equipment,  under  operating  leases  that  extend from one to ten
years.  Certain of these leases have renewal options and escalation  provisions.
The Company is party to a lease for its corporate  office for an annual  payment
of approximately $30,000 with an affiliate of its Chairman.

13.           Segment Information

The Company has two reportable  business segments.  The larger of the two is the
manufacture  and sale of  adhesive  backed  label  stock for labels and  related
applications.  The  other  reportable  segment  is the  manufacture  and sale of
frequency control devices (quartz crystals and oscillators). The Company is also
engaged in the manufacture  and sale of glass forming,  impact milling and other
equipment,  and these results are combined and reported as Other  Manufacturing.
Each  of  the  businesses  is  located  domestically,   and  export  sales  were
approximately  $22.6 million in 1999, $21.2 million in 1998 and $26.2 million in
1997.  For the  years  ended  December  31,  1999,  1998 and  1997 one  customer
accounted for $18.3 million, $17.7 million, and $21.4 million,  respectively, of
the  adhesive-backed  label stock  segment's  net sales.  The Company  considers
concentrations of credit risk to be minimal due to its diverse customer base.

EBITDA  (before  corporate  allocation)  for  operating  segments  is  equal  to
operating  profit before  depreciation,  amortization  and  allocated  corporate
expenses.  EBITDA  is  presented  because  it  is a  widely  accepted  financial
indicator  of value and  ability  to incur  and  service  debt.  EBITDA is not a
substitute  for  operating  income or cash flows from  operating  activities  in
accordance with generally accepted accounting principles.

Operating profit (loss) is equal to revenues less operating expenses,  excluding
unallocated general corporate  expenses,  interest and income taxes. The Company
allocates a portion of its general corporate expenses to its operating segments.
Such allocation was $ 300,000 per year during the years ended December 31, 1999,
1998 and 1997,  respectively.  Identifiable  assets of each industry segment are
the assets used by the segment in its  operations  excluding  general  corporate
assets.  General  corporate  assets are principally  cash and cash  equivalents,
short-term investments and certain other investments and receivables.
<TABLE>
<CAPTION>

                                                     Years ended December 31
                                                  1999        1998         1997
(In thousands)
Revenues
<S>                                              <C>          <C>          <C>
Adhesive-backed label stock ..................   $ 155,112    $ 151,561    $ 106,787
Frequency control devices ....................      26,484       22,798       22,828
Other manufacturing ..........................      12,626       13,285       24,120
                                                 ---------    ---------    ---------
Consolidated total ...........................   $ 194,222    $ 187,644    $ 153,735
                                                 =========    =========    =========
EBITDA (before corporation allocation)

Adhesive-backed label stock ..................   $   8,889    $  12,010    $   9,027
Frequency control devices ....................       2,640        2,073        2,199
Other manufacturing ..........................      (1,188)      (1,411)       1,206
Corporate manufacturing expenses .............      (2,681)      (2,903)      (2,112)
                                                 ---------    ---------    ---------
Total manufacturing ..........................       7,660        9,769       10,320
Corporate expenses, gross ....................      (1,452)        (530)        (374)
                                                 ---------    ---------    ---------
Consolidated total ...........................   $   6,208    $   9,239    $   9,946
                                                 =========    =========    =========


Operating Profit
Adhesive-backed label stock ..................   $   4,155    $   8,104    $   6,923
Frequency control devices ....................       1,800        1,428        1,610
Other manufacturing ..........................      (1,821)      (1,922)         850
Corporate manufacturing expenses .............      (2,894)      (3,006)      (2,279)
                                                 ---------    ---------    ---------
Total manufacturing ..........................       1,240        4,604        7,104
Unallocated corporate expense ................      (1,155)        (530)        (374)
                                                 ---------    ---------    ---------
Consolidated Total ...........................   $      85    $   4,074    $   6,730
                                                 =========    =========    =========
Depreciation and Amortization
Adhesive-backed label stock ..................   $   4,785    $   3,906    $   2,104
Frequency control devices ....................         740          645          589
Other manufacturing ..........................         528          511          429
Corporate manufacturing expenses .............         967          874          726
                                                 ---------    ---------    ---------

Consolidated Total ...........................   $   7,020    $   5,936    $   3,848
                                                 =========    =========    =========

Capital expenditures

Adhesive-backed label stock ..................   $   2,625    $   2,219    $   1,854
Frequency control devices ....................         804          878          688
Other manufacturing ..........................         366          200          689
                                                 ---------    ---------    ---------
Consolidated Total ...........................   $   3,795    $   3,297    $   3,231
                                                 =========    =========    =========
Total Assets
Adhesive-backed label stock ..................   $ 105,674    $ 105,463    $  47,188
Frequency control devices ....................      10,940        8,898        8,858
Other manufacturing ..........................      86,699       19,688       27,892
Discontinued Operations:
   Lynch Interactive .........................        --        228,342      239,918
   Industrial tape business ..................        --        110,256       95,582
General Corporate ............................       7,879        7,353        4,198
                                                 ---------    ---------    ---------
Consolidated Total ...........................   $ 211,192    $ 480,000    $ 423,636
                                                 =========    =========    =========

Total operating profit for reportable segments   $      85    $   4,074    $   6,730
Other profit or loss:
  Investment income ..........................       2,354          199          305
  Interest expense ...........................     (11,882)      (8,591)      (5,189)
 Gain on sales of subsidiary stock ...........        --          2,090          (91)
                                                 ---------    ---------    ---------
Income (loss) from continuing operations
  before income taxes, minority interests
   and extraordinary item ....................   $  (9,443)   $  (2,228)   $   1,755
                                                 =========    =========    =========

</TABLE>


14.      Quarterly Results of Operations (unaudited)

The following is a summary of the quarterly  results of operations for the years
ended December 31, 1999 and 1998 (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                 1999 Three Months Ended
                                       Mar. 31(a)    June 30   Sep. 30 (b)  Dec. 31 (b)

<S>                                     <C>         <C>         <C>         <C>
Sales and revenues ..................   $ 46,411    $ 47,363    $ 51,070    $ 49,378
Operating profit ....................       (312)        701       1,013      (1,317)
Income (loss) from continuing
   Operations .......................       (975)       (500)       (617)     (2,160)
Net income (loss) ...................    (10,991)        427       7,892       1,089

Basic and diluted earnings per share:
   Income (loss) from continuing
   operations
Net income (loss) ...................      (0.69)      (0.35)      (0.44)      (1.53)
                                           (7.75)       0.30        5.59        (.77)


                                                1998 Three Months Ended
                                         Mar. 31      June 30   Sep. 30(c)   Dec. 31

Sales and revenues ..................   $ 39,505    $ 49,505    $ 49,824   $ 49,257
Operating profit (loss) .............      1,242       1,575       1,663       (385)
Income (loss) from continuing
   Operations .......................        (98)       (358)      1,070     (3,507)
Net income (loss) ...................       (436)      1,324       2,149        320

Basic and diluted earnings per share:

Income (loss) from continuing
   operations .......................      (0.06)      (0.26)       0.76      (2.48)

Net income (loss) ...................      (0.30)       0.93        1.52       0.22

<FN>
NOTE:

a)   Includes  write down of PCS licenses of $15.4 million of Lynch  Interactive
     Corporation

b)   Includes  gain on sale of  Industrial  Tape  Segment of  Spinnaker of $10.4
     million after income taxes, and minority interest.

c)   Includes gain on sale of subsidiary stock of $2,127.

</FN>
</TABLE>

15.       Subsequent Events

In March 2000 Lynch Systems completed a project specific line of credit totaling
$7.1 million related to a contract to deliver  equipment in 2000.  Substantially
all assets of Lynch  Systems are pledged in support of the credit  facility.  In
addition,  the Company has guaranteed the full amount of the credit facility and
has pledged $4 million of its Class A Common Stock of  Spinnaker  as  additional
collateral.

In March,  2000 the Company  completed the previously  announced sale of 100,000
shares of its common stock to its Chairman at $30 per share, or $3 million. This
transaction  is subject to  shareholder  approval at the  Company's  2000 annual
meeting. These funds will be available for general corporate purposes.

SCHEDULE I
<TABLE>

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                        LYNCH CORPORATION (PARENT COMPANY)
                            CONDENSED BALANCE SHEETS

<CAPTION>
                                                        December 31
                                                 -------------------------
ASSETS                                            1999              1998
                                                 --------------------------
CURRENT ASSETS
<S>                                                   <C>       <C>
  Cash and Cash Equivalents .......................   $ 1,154   $   291
   Marketable Securities and Short Term Investments        24       874
   Deferred Income Taxes ...... ...................       412       140
   Other Current Assets ...........................        81        40
                                                      -------   -------
                                                        1,671     1,345
OFFICE EQUIPMENT - Net ..............................      --        52

OTHER ASSETS (Principally investments in and
  amounts due from consolidated subsidiaires)......    16,643    72,729
                                                      -------   -------
TOTAL ASSETS ......................................   $18,314   $74,126
                                                      =======   =======

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITITES ..............................   $ 2,110   $22,832

LONG TERM DEBT ....................................      --       8,623
DEFERRED INCOME TAXES ......... ...................      --         980
LONG TERM LIABILITIES .............................       213      --
DEFERRED CHARGES ..................................      --       1,898

SHAREHOLDERS' EQUITY
    Common Stock                                        5,139     5,139
    Other Shareholders' Equity                         10,852    34,654
                                                      -------   -------
TOTAL SHAREHOLDERS' EQUITY ........................   $15,991   $39,793
                                                      -------   -------
Total Liabilities and Shareholders' Equity ........   $18,314   $74,126
                                                      =======   =======
</TABLE>
See accompanying Notes to Condensed Financial Information


<PAGE>
<TABLE>


                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                     LYNCH CORPORATION (PARENT COMPANY)
                     CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
                                                                Years Ended December 31
                                                          -----------------------------------
                                                            1999       1998        1997
                                                          -----------------------------------

<S>                                                            <C>        <C>        <C>
Interest, Dividends & Gains on Sale of Marketable Securities   $    17    $   128    $   377
Interest & Other Income from Subsidiaries                           23         35         35
                                                                -------    -------    -------
TOTAL INCOME ...............................................        40        163        412

Costs & Expenses:
Unallocated Corporate Administrative Expense ...............     1,155      1,371      1,436
Interest Expense ...........................................         7      1,394      1,257
Interest Expense to Subsidiaries ...........................        23        830        741
                                                               -------    -------    -------
TOTAL COSTS AND EXPENSES....................................     1,185      3,595      3,434
                                                               -------    -------    -------
LOSS BEFORE INCOME TAXES AND EQUITY IN NET
 (LOSS) OF SUBSIDIARIES .....................................    (1,145)   (3,432)   (3,022)

Income Tax Benefit .........................................        321     1,648      1,142
Equity in Net Income (Loss) of Subsidiaries ................      (759)     5,141       (998)

NET INCOME (LOSS) ..........................................   ($1,583)   $ 3,357    ($2,878)
                                                                =======   =======     =======
</TABLE>
See accompanying Notes to Condensed Financial Information


<TABLE>


                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                       LYNCH CORPORATION (PARENT COMPANY)
                       CONDENSED STATEMENTS OF CASH FLOW

<CAPTION>
                                                     Year Ended December 31
                                                    -----------------------------
                                                      1999        1998      1997
                                                    ---------   --------  -------
Cash provided from (used in)
<S>                                                <C>        <C>            <C>
  Operating Activities                             $   405    $ 1,049        (25)
                                                    -------    -------    -------

INVESTING ACTIVITIES:
Investment in Lynch Manufacturing ................       981      3,000      1,135
Investment and Advances to Brighton Communications      --         --          (17)
Investment in and advances to PCS Partnerships ...      --        3,692     (8,628)
Other ............................................
                                                        --         (176)       (94)
                                                     -------    -------    -------
NET CASH PROVIDED FROM (USED IN) INVESTING
   ACTIVITIES ....................................       981      6,516     (7,604)
                                                     -------    -------    -------
FINANCING ACTIVITIES:
Net Borrowings ...................................      --       (7,564)     7,179
Lines of Credit ..................................      --         --         --
(Purchase) Sale of Treasury Stock ................      (523)      --          672
Other ............................................      --         --         --
                                                     -------    -------    -------
NET CASH (USED IN) PROVIDED FROM FINANCING
   ACTIVITIES ....................................      (523)    (7,564)     7,851
                                                      -------    -------    -------

TOTAL INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS ...................................       863          1        222

CASH AND CASH EQUIVALENTS AT BEGINNING
   OF YEAR                                                291        290         68
                                                      -------    -------    -------

CASH AND CASH EQUIVALENTS AT END OF YEAR .........    $ 1,154    $   291    $   290
                                                      =======    =======    =======
</TABLE>

See accompanying Notes to Condensed Financial Information



NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION

In the parent  company's  financial  statements,  the  Company's  investment  in
subsidiaries  is stated at cost plus  equity in  undistributed  earnings  of the
subsidiaries.

NOTE B - SPIN OFF OF LYNCH INTERACTIVE CORPORATION

On August 12, 1999,  the Board of directors  approved a plan to  distribute  the
stock  of  Lynch  Interactive  Corporation  on  a  one  for  one  basis  to  the
shareholders of Lynch Corporation  ("spin off"). Lynch completed the spin off of
Lynch  Interactive   Corporation   ("Interactive")  on  September  1,  1999,  to
stockholders of record on August 23, 1999.  Pursuant to the spin off, each Lynch
shareholder  received  one share of  Interactive  common stock for each share of
Lynch  owned.  Lynch had  received a private  letter  ruling  from the  Internal
Revenue  Service  that  the spin  off  would be tax free to Lynch  shareholders.
Interactive is listed on the American Stock Exchange under the symbol "LIC".

NOTE C - DIVIDENDS FROM SUBSIDIARIES

Cash  dividends paid to Lynch  Corporation  from the  Registrant's  consolidated
subsidiaries  were $0 in 1999,  $3,060,000  in 1998 and  $1,195,000  in 1997. No
other dividends were received from subsidiaries or investees.

NOTE D - LONG-TERM DEBT

At  December  31, 1998 the Company  had a note  payable to a  subsidiary  with a
principal  amount of $6.0 million at a fixed interest rate of 6%, due 2001. Such
note was transferred to Lynch Interactive in connection with the spin-off.


NOTE E - SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR ADDITIONAL
         INFORMATION.


<TABLE>


                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                       LYNCH CORPORATION AND SUBSIDIARIES
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<CAPTION>

                                   COLUMN A          COLUMN B           COLUMN C           COLUMN D          COLUMN E
                                                    ADDITIONS           ADDITIONS
                                   BALANCE AT                           CHARGED TO
                                   BEGINNING     CHARGED TO COSTS    OTHER ACCOUNTS                       BALANCE AT END
                                   OF PERIOD       AND EXPENSES         DESCRIBE          DEDUCTIONS         OF PERIOD
                                                                                                         DESCRIBE (B)
DESCRIPTION
<S>                               <C>                <C>                   <C>          <C>                    <C>
YEAR ENDED DECEMBER 31, 1999
  ALLOWANCE FOR UNCOLLECTIBLE     $ 395,000          $ 81,000                $ 0         $115,000               $361,000

YEAR ENDED DECEMBER 31, 1998                                                             $910,000(A)
   ALLOWANCE FOR UNCOLLECTIBLE   $1,448,000          $723,000                $ 0         $866,000               $395,000

YEAR ENDED DECEMBER 31, 1997
   ALLOWANCE FOR UNCOLLECTIBLE   $1,525,000          $742,000                $ 0         $819,000             $1,448,000


<FN>
(A)      ALLOCATION OF VALUATION ACCOUNT TO SEGMENTS SOLD OR SPUN OFF
(B)      UNCOLLECTIBLE ACCOUNTS WRITTEN OFF ARE NET OF RECOVERIES
</FN>
</TABLE>


<PAGE>





LYNCH CORPORATION

     Pursuant to the requirements of Section 13 and 15 (d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this amendment to be signed
on its behalf by the undersigned, thereunto duly authorized.

By:s/LOUIS A. GUZZETTI
----------------------
     LOUIS A. GUZZETTI
      Chief Executive Officer (Principal
       Executive Officer)

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
amendment  has been  signed  below by the  following  persons  on  behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

         Signature                        Capacity                                       Date
<S>                                 <C>                                                <C>
* MARIO J. GABELLI                  Chairman of the Board of
------------------
  MARIO J. GABELLI                  Directors and Director                              April 20, 2000


s/LOUIS A. GUZZETTI                 Principal Executive Officer                         April 20, 2000
-------------------
  LOUIS A. GUZZETTI                 and Director


* E. VAL CERUTTI                    Director                                            April 20, 2000
----------------
  E. VAL CERUTTI


*AVRUM GRAY                         Director                                            April 20, 2000
-----------
 AVRUM GRAY


* RALPH R. PAPITTO                  Director                                            April 20, 2000
------------------
  RALPH R. PAPITTO


s/ROBERT E. DOLAN                   Director                                            April 20, 2000
------------------
  ROBERT E. DOLAN


s/ROGER J. DEXTER
   ROGER J. DEXTER                   (Principal Financial
                                     and Accounting Officer)                            April 20, 2000


*By:ROBERT A. HURWICH
--------------------
    ROBERT A. HURWICH
    Attorney-in-fact for Messrs.
    Gabelli, Cerutti, Gray and
    Papitto

</TABLE>



                                EXHIBIT INDEX

          The following exhibits are filed with this amendment for Form 10-K.

     Exhibit No.                 Description

         23.1                 Consent of Ernst & Young LLP
         27.A                 Amended Financial Data Schedule