UNITED STATES SECURITIES & EXCHANGE COMMISSION WASHINGTON, D.C. 20549  FORM 10-Q (Mark One)x
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
September 30, 2008ORo
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934  For the transition period from ____________ to
____________  Commission File No. 1-106 THE
LGL GROUP, INC.  (Exact Name of Registrant as Specified in
Its Charter)  Delaware
38-1799862(State or Other Jurisdiction
of
(I.R.S. Employer
Identification No.)Incorporation or
Organization)2525 Shader Rd., Orlando,
Florida
32804(Address of principal
executive offices)
(Zip Code)(407)
298-2000(Registrants
telephone number, including area code)(Former name,
former address, and former fiscal year,if changed since last report)  Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.  Yes x   No o  Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.  See the
definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act.  (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting
company)  Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).  Yes o   No x  Indicate the number of shares
outstanding of each of the issuer s classes of c ommon s tock, as of the latest
practicable date. Class

Outstanding
at November 13, 2008Common Stock, $0.01 par
value

2,180,355  1    INDEX   THE LGL GROUP, INC.  PART I.
FINANCIAL INFORMATIONItem 1.
Condensed Consolidated Financial
Statements (Unaudited)Condensed Consolidated Balance
Sheets:
3
        September 30, 2008
        December 31, 2007Condensed Consolidated
Statements of Operations:
5
        Three months ended
September 30, 2008 and 2007
        Nine months ended
September 30, 2008 and 2007Condensed Consolidated
Statements of Stockholders Equity:
6
        Nine months ended
September 30, 2008Condensed Consolidated
Statements of Cash Flows:
7
        Nine months ended
September 30, 2008 and 2007Notes to Condensed Consolidated
Financial Statements:
8Item 2.
Managements Discussion and
Analysis of Financial Condition andResults of Operations
15Item 3.
Quantitative and Qualitative
Disclosure About Market Risk
19Item 4T.
Controls and Procedures
19PART II.
OTHER INFORMATIONItem 1.
Legal Proceedings
21Item 1A.
Risk Factors
21Item 6.
Exhibits
21     2    PART I FINANCIAL
INFORMATION  Item 1 Condensed Consolidated
Financial Statements.  THE LGL GROUP, INC.  CONDENSED
CONSOLIDATED BALANCE SHEETS  UNAUDITED  (In thousands)  September 30,
2008
December 31,
2007 (A)ASSETSCurrent
Assets:Cash
and cash equivalents
$
      5,604
$
      5,233Investments
- marketable securities
21
48Accounts
receivable, less allowances of $170 and $415, respectively
6,065
6,382Inventories
5,728
5,181Prepaid
expenses and other current assets
269
381Assets
of Discontinued Operations
--
5Total
Current Assets
17,687
17,230Property,
Plant and Equipment:Land
698
698Buildings
and improvements
5,043
5,020Machinery
and equipment
12,697
12,541Gross
Property, Plant and Equipment
18,438
18,259Less:
Accumulated Depreciation
(13,862)
(13,196)Net
Property, Plant and Equipment
4,576
5,063Deferred
Income Taxes
111
111Other
Assets
415
472Total
Assets
$
 22,789
$
    22,876   3    THE LGL GROUP,
INC. CONDENSED
CONSOLIDATED BALANCE SHEETS  UNAUDITED, continued (In thousands, except share and per share
amounts)  September 30,
2008
December 31,
2007 (A)LIABILITIES
AND STOCKHOLDERS EQUITYCurrent
Liabilities:Note
payable to bank
$
      2,074
$
     1,035Trade
accounts payable
2,541
2,535Accrued
compensation expense
1,877
1,481Other accrued expenses
752
771Current
maturities of long-term debt
411
419Liabilities
of Discontinued Operations
146
231Total
Current Liabilities
7,801
6,472Long-term
debt
3,748
4,035Total
Liabilities
11,549
10,507Commitments
and ContingenciesStockholders
Equity:Common
stock, $0.01 par value - 10,000,000 shares authorized; 2,188,510 shares
issued; 2,180,355 and 2,167,202 shares outstanding, respectively
22
22Additional
paid-in capital
20,763
20,921Accumulated
deficit
(9,258)
(8,066)Accumulated
other comprehensive loss
(132)
(101)Treasury
stock, at cost, 8,155 and 21,308 shares, respectively
(155)
(407)Total
Stockholders Equity
11,240
12,369Total
Liabilities and Stockholders Equity
$
    22,789
$
   22,876 (A) The Condensed Consolidated Balance
Sheet at December 31, 2007 has been derived from the audited financial
statements at that date, but does not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements.  See accompanying Notes to Condensed
Consolidated Financial Statements.   4         THE LGL GROUP, INC.  CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS  UNAUDITED  (In thousands, except share and per share
amounts)  Three Months
Ended September 30,

Nine Months
Ended September 30,2008
2007

2008
2007REVENUES
$
  10,248
$     9,612

$
 30,181
$    29,003Cost
and expenses:Manufacturing
cost of sales
7,627
7,350

22,325
22,242Engineering,
selling and administrative
2,714
2,545

8,799
7,807Impairment
loss on Lynch Systems assets
--
--

--
905OPERATING
LOSS
(93)
(283)

(943)
(1,951)Other
income (expense):Investment
income
--
--

--
1,526Interest
expense, net
(79)
(79)

(208)
(260)Gain
on sale of land
--
--

--
88Gain
on sale of equipment
255
--

255
--Other
expense
(58)
15

(131)
(24)Total Other Income
(Expense)
118
(64)

(84)
1,330INCOME
(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
25
(347)

(1,027)
(621)Benefit
(Provision) for income taxes
(84)
(93)

(190)
(134)LOSSFROM CONTINUING
OPERATIONS
(59)
(440)

(1,217)
(755)Discontinued
Operations:Income
(Loss) from Discontinued Operations
30
(153)

25
(1,131)Gain
(Loss) on sale of Lynch Systems
--
--

--
(982)Income
(Loss) from discontinued operations
30
(153)

25
(2,113)NET LOSS
$
     (29)
$     (593)

$
  (1,192)
$   (2,868)Weighted
average shares outstanding, basic and diluted.
2,176,555
2,157,528

2,172,090
2,155,654BASIC
AND DILUTED LOSS PER SHARE FROM CONTINUING OPERATIONS
$
   (0.03)
$    (0.20)

$
   (0.56)
$    (.035)BASIC
AND DILUTED GAIN (LOSS) PER SHARE FROM DISCONTINUED OPERATIONS
$
    0.02
$    (0.07)

$
      0.01
$    (0.98)BASIC
AND DILUTED NET LOSS PER SHARE
$
   (0.01)
$    (0.27)

$
   (0.55)
$    (1.33)      See accompanying Notes to Condensed
Consolidated Financial Statements   5    THE LGL
GROUP, INC. CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY  UNAUDITED (In thousands, except share amounts)  Shares of Common StockOutstanding
CommonStock
AdditionalPaid-InCapital
Accumulated Deficit
Accumulated Other Comprehensive Loss
Treasury Stock
TotalBalance at January 1, 2008
2,167,202
$
        22
$
    20,921
$
      (8,066)
$
            (101)
$
     (407)
$
  12,369Comprehensive loss:Net loss for period
--
--
--
(1,192)
--
--
(1,192)Other comprehensive loss
--
--
--
--
(31)
--
(31)Comprehensive loss






(1,223)Stock based compensation
--
--
94
--
--
--
94Issuance of treasury shares for vested restricted
stock
13,153
--
(252)
--
--
252
--Balance at September 30, 2008
2,180,355
$
         22
$
    20,763
$
      (9,258)
$
            (132)
$
     (155)
$
  11,240  See accompanying Notes to Condensed
Consolidated Financial Statements  6         THE LGL GROUP, INC.  CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS  UNAUDITED  (In thousands) Nine Months
Ended
September 30,2008
2007OPERATING
ACTIVITIESNet
loss
$
     (1,192)
$
 (2,868)Adjustments
to reconcile net loss to net cash used in operating activities:Impairment on Lynch Systems
assets
--
905Loss on sale of Lynch
Systems
--
982Depreciation
771
808Stock
based compensation
94
79Amortization
of finite-lived intangible assets
56
44Gain
on sale of land
--
(88)Gain
on sale of equipment
(255)
--Gain
realized on sale of marketable securities
--
(1,526)Changes
in operating assets and liabilities:Receivables
317
679Inventories
(547)
1,048Accounts
payable and accrued liabilities
380
(785)Other
assets/liabilities
112
15Net cash
used in operating activities of continuing operations
(264)
(707)Net
cash (used in) provided by operating activities of discontinued
operations
(80)
517Net
cash used in operating activities
(344)
(190)INVESTING
ACTIVITIESCapital
expenditures
(284)
(431)Restricted
cash
--
96Proceeds
from sale of marketable securities
--
2,292Proceeds
from sale of land
--
171Proceeds
from sale of equipment
255
--Net
cash (used in) provided by investing activities of continuing
operations
(29)
2,128Net
cash provided by investing activities of discontinued operations
--
722Net
cash (used in) provided by investing activities
(29)
2,850FINANCING
ACTIVITIESNet
borrowings on note payable to bank
1,039
(487)Repayments
of long-term debt
(295)
(737)Proceeds
from long-term debt
--
443Net
cash provided by (used in) financing activities of continuing
operations
744
(781)Net
cash used in financing activities of discontinued operations
--
(900)Net
cash provided by (used in) financing activities
744
(1,681)Increase
in cash and cash equivalents
371
979Cash
and cash equivalents at beginning of period
5,233
4,429Cash
and cash equivalents at end of period
$
    5,604
$
  5,408Supplemental
Disclosure:Cash
paid for interest
$
       290
$
     395Cash
paid for income taxes
$
         21
$
      47Non-cash
Financing Transactions:Issuance
of treasury shares for vested restricted stock
$
       252
$
     191  See accompanying Notes to Condensed
Consolidated Financial Statements   7    THE LGL GROUP, INC.  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS   A. Subsidiaries of the Registrant   As of
September 30, 2008, the subsidiaries of The LGL Group, Inc. (the Company) are
as follows: Owned By
LGLM-tron Industries, Inc.
100.0%M-tron
Industries, Ltd.
100.0%Piezo
Technology, Inc.
100.0%Piezo
Technology India Private Ltd.
99.9%Lynch Systems, Inc.
100.0%   The Company
operates through its principal subsidiary, M-tron Industries, Inc. (Mtron),
which includes the operations of M-tron Industries, Ltd. and Piezo Technology,
Inc. (PTI). The combined operations are referred to herein as MtronPTI.
 MtronPTI has operations in Orlando, Florida, Yankton, South Dakota and
Noida, India.  In addition, MtronPTI has a sales office in Hong Kong.
 During 2007, the Company sold the operating assets of Lynch Systems, Inc.
(Lynch Systems), a subsidiary of the Company, to an unrelated third party. On June 19,
2007, in accordance with the Purchase Agreement dated May 17, 2007, as amended
(the "Purchase Agreement"), by and between Lynch Systems and Olivotto Glass
Technologies S.p.A. ("Olivotto"), Lynch Systems completed the sale of certain of
its assets to Lynch Technologies, LLC (the "Buyer"), the assignee of Olivotto's
rights and obligations under the Purchase Agreement  (see Note K).  B. Basis of
Presentation  The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with U.S. generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended September 30, 2008 are not
necessarily indicative of the results that may be expected for the full year
ending December 31, 2008.  The condensed
consolidated balance sheet at December 31, 2007 has been derived from the
audited financial statements at that date, but does not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements.  The
financial results presented for the three and nine month periods ended September
30, 2007 have been reclassified to present the operations of Lynch Systems as
discontinued operations (see Note K).  For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Companys Annual Report on Form 10-K for the year ended
December 31, 2007.       C. Investments  The following
is a summary of marketable securities (investments) held by the Company: Cost
Gross
Unrealized
(Loss)
Fair
Value(in
thousands)September 30, 2008
$       68
$
   (47)
$
    21December 31, 2007
$
      68
$
   (20)
$
    48   8      D. Inventories  Inventories
are stated at the lower of cost or market value.  At MtronPTI, inventories
are valued using the first-in first-out (FIFO) method for 76.5% and 70.5% of
the inventory, as of September 30, 2008 and December 31, 2007, respectively, and
the remaining 23.5% and 29.5% as of September 30, 2008 and December 31, 2007,
respectively, are valued using last-in first-out (LIFO).  The Company
reduces the value of its inventory to market value when the market value is
believed to be less than the cost of the item. September 30,
2008
December 31,
2007(in thousands)Raw materials
$
    2,992
$
   2,306Work in process
1,505
1,498Finished goods
1,231
1,377Total Inventories
$
    5,728
$
  5,181  Current cost exceeded the LIFO value
of inventory by $209,000 and $266,000 at September 30, 2008 and December 31,
2007, respectively.      E. Note
Payable to Banks and Long-Term Debt September 30, 2008
December 31,
2007Note Payable:
(in thousands)MtronPTI
revolving loan (First National Bank of Omaha (FNBO)) at 30-day LIBOR
plus 2.1% (4.59% at September 30, 2008), due June 2009
$
    2,074
$      1,035Long-Term Debt:MtronPTI
term loan (RBC Centura Bank (RBC)) due October 2010.  The note
bears interest at LIBOR Base Rate plus 2.75%.  Interest rate swap
converts loan to a fixed rate, at 7.51% at September 30, 2008
$
    2,837
$
     2,894MtronPTI
term loan (FNBO) at 30-day LIBOR plus 2.1%. Interest rate swap converts
loan to a fixed rate, at 5.60% at September 30, 2008, due January 2013
1,249
1,430Rice
University Promissory Note at a fixed interest rate of 4.5%, due August
2009
73
1304,159
4,454Current maturities
(411)
(419)Long -Term Debt
$     3,748
$     4,035   On October
14, 2004, MtronPTI, entered into a loan agreement with FNBO (the FNBO Loan
Agreement).  The FNBO Loan Agreement provides for a short-term credit
facility of up to $5,500,000 (the FNBO Revolving Loan).  The provisions
of the FNBO Revolving Loan were subsequently amended, most recently on June 30,
2008.  The principal balance of the FNBO Revolving Loan currently bears
interest at 30-day LIBOR plus 2.1%, with interest only payments due monthly and
the final payment of principal and interest due on June 30, 2009.  At
September 30, 2008, the amount outstanding under the revolving credit loan was
$2,074,000.  The Company had $3,426,000 of unused borrowing capacity under
its revolving line of credit at September 30, 2008, compared to $4,465,000 at
December 31, 2007. The FNBO Loan
Agreement also provides for a term loan in the original principal amount of
$2,000,000 (the FNBO Term Loan).  The provisions of the FNBO Term Loan
were subsequently amended, most recently on January 24, 2008.  Under such
amendment, the original principal amount of the FNBO Term Loan was approximately
$1,410,000, and the principal balance bears interest at 30-day LIBOR plus 2.1%,
with principal and interest payments due monthly and the final payment of
principal and interest due January 24, 2013.  9    The
FNBO Loan Agreement contains a variety of affirmative and negative covenants,
including, but not limited to, financial covenants that MtronPTI maintain: (i)
tangible net worth of not less than $7,000,000, (ii) a ratio of current assets
to current liabilities of not less than 1.5 to 1.0; (iii) a ratio of total
liabilities to tangible net worth of not greater than 2.75 to 1.0; and (iv) a
fixed charge ratio of 1.2 to 1.0.  At September 30, 2008, the Company was
in compliance with these covenants. All
outstanding obligations under the FNBO Loan Agreement are guaranteed by the
Company. In
connection with the FNBO Term Loan, MtronPTI entered into a separate interest
rate swap agreement with FNBO from which it receives periodic payments at the
LIBOR Base Rate and makes periodic payments at a fixed rate of 5.60% through the
life of the FNBO Term Loan.  The Company has designated this swap as a cash
flow hedge in accordance with Financial Accounting Standards Boards (FASB)133 Accounting for
Derivative Instruments and Hedging Activities (FASB 133).  The fair
value of the interest rate swap at September 30, 2008 is $1,000 net of any tax
effect, and is included in swap liability on hedge contracts on the condensed
consolidated balance sheets.  The change in fair value is reflected in
other comprehensive loss, net of any tax effect. On September
30, 2005, MtronPTI entered into a loan agreement (the RBC Loan Agreement) with
RBC, which provides for a loan in the original principal amount of $3,040,000
(the RBC Term Loan).  The RBC Term Loan bears interest at LIBOR Base Rate
plus 2.75% and is being repaid in monthly installments based on a 20 year
amortization, with the then remaining principal balance and interest due on the
fifth anniversary of the RBC Loan Agreement.  The RBC Loan Agreement
contains a variety of affirmative and negative covenants, including, but not
limited to, financial covenants that MtronPTI maintain: (i) a ratio of total
liabilities to tangible net worth of at least 4.0 to 1.0; (ii) tangible net
worth of at least $4.2 million; and (iii) a fixed charge coverage ratio of not
less than 1.2 to 1.0.  At September 30, 2008, the Company was in compliance
with these covenants. All
outstanding obligations under the RBC Loan Agreement are collateralized by
security interests in the assets of MtronPTI and guaranteed by the Company. In connection
with the RBC Term Loan, MtronPTI entered into a five-year interest rate swap
from which it receives periodic payments at the LIBOR Base Rate and makes
periodic payments at a fixed rate of 7.51% with monthly settlement and rate
reset dates.  The Company has designated this swap as a cash flow hedge in
accordance with FASB 133.  The fair value of the interest rate swap at
September 30, 2008 is ($85,000) net of any tax effect, and is included in swap
liability on hedge contracts on the condensed consolidated balance sheets.
 The change in fair value is reflected in other comprehensive loss, net of
any tax effect.  F. Stock Based Compensation The Company
utilizes the provisions of Statement of Financial Accounting Standards (SFAS)
123R, Share-Based Payment (SFAS 123-R) to measure the cost of employee
services in exchange for an award of equity instruments based on the grant-date
fair value of the award and to recognize cost over the requisite service period.
 Compensation expense is recognized for all share-based payments granted
under SFAS 123-R, and all awards granted under SFAS 123 to employees prior to
the effective date that remain unvested on the effective date.  The Company
recognizes compensation expense on fixed awards with pro rata vesting on a
straight-line basis over the service period. On March 20,
2007, the Company granted 10,000 restricted shares to an executive officer.
 This officer subsequently resigned prior to December 31, 2007 without
vesting in any shares.  On December 31, 2007, the Board of Directors
granted restricted shares to eight of its members at 1,471 shares each.  On
January 22, 2008, the Board of Directors granted 1,250 restricted shares to one
of its members. All of these shares are to vest ratably over 2008 at the end of
each respective quarter.  Total stock compensation related expense for all
outstanding grants for the three-month period ended September 30, 2008 was
$33,000 and for the nine-month period ended September 30, 2008 was $94,000. The Company
estimates the fair value of stock based compensation on the date of grant using
the Black-Scholes-Merton option-pricing model for stock option grants.  The
Black-Scholes-Merton option-pricing model requires subjective assumptions,
including future stock price volatility and expected time to exercise, which
greatly affect the calculated values.  There is no expected dividend rate.
 Historical Company information was the primary  10    basis
for the expected volatility assumption.  Prior years grants were calculated
using historical volatility as the Company believes that the historical
volatility over the life of the option is more indicative of the options
expected volatility in the future.  The risk-free interest rate is based on
the U.S. Treasury zero-coupon rates with a remaining term equal to the expected
term of the option. SFAS 123-R also requires forfeitures to be estimated at the
time of grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates.  Based on past history of actual
performance, a zero forfeiture rate has been assumed. G. Loss Per
Share The Company computes
loss per share in accordance with SFAS No.  128, Earnings Per Share.
 Basic loss per share is computed by dividing net loss by the weighted
average number of common shares outstanding during the period.  Diluted
earnings per share adjusts basic earnings per share for the effects of stock
options, restricted common stock, and other potentially dilutive financial
instruments, only in the periods in which the effects are dilutive.  The following
securities have been excluded from the diluted loss per share computation
because the impact of the assumed exercise of stock options and unvested
restricted stock would have been anti-dilutive because the Company has reported
net losses: Three Months
Ended
September 30,
Nine Months
Ended
September 30,2008
2007
2008
2007Options to purchase common
stock
200,000
200,000
200,000
200,000Unvested restricted stock
2,881
30,000
2,881
30,000Total
202,881
230,000
202,881
230,000    H. Other
Comprehensive Loss  Other
comprehensive loss includes the changes in fair value of investments classified
as available for sale and the changes in fair values of derivative instruments
designated as cash flow hedges. For the nine
months ended September 30, 2008, total comprehensive loss was ($1,223,000),
comprised of net loss of ($1,192,000) and change in Accumulated Other
Comprehensive Loss of ($31,000), compared to total comprehensive loss of
($4,642,000) in the nine months ended September 30, 2007, which was comprised of
net loss of ($2,868,000) and change in Other Comprehensive Loss of
($1,774,000). The change in
accumulated other comprehensive loss, net of related tax, for the nine month
periods ended September 30, 2008 and 2007, are as follows: Nine Months
Ended
September 30,2008
2007(in thousands)Balance beginning of period
$
      (101)
$
       1,790Deferred loss on swap liability on
hedge contracts
(4)
(18)Unrealized loss on available-for-sale
securities
(27)
(266)Reclassification adjustment for gains
included in net income
--
(1,526)Balance end of
period
$
      (132)
$
           (20)   11    The components of accumulated other comprehensive loss, net of
related tax at September 30, 2008 and December 31, 2007, are as follows:  September 30,
2008
December 31, 2007(in thousands)Deferred loss on swap liability on
hedge contracts
$
        (84)
$
        (78)Unrealized loss on available-for-sale
securities
(48)
(23)Accumulated other
comprehensive loss
$
      (132)
$
      (101)    I. Fair
Value Measurements The Company
measures financial assets and liabilities at fair value in accordance with SFAS
No. 157, Fair Value Measurements (SFAS 157).  These measurements
involve various valuation techniques and assume that the transactions would
occur between market participants in the most advantageous market for the
Company.  The following is a summary of valuation techniques utilized by
the Company for its significant financial assets and liabilities: Assets To estimate
the market value of its marketable securities, the Company obtains current
market pricing from quoted market sources or uses pricing for similar
securities. Assets measured at fair value on a recurring basis are summarized
below. Quoted Prices in Active Markets for Identical Assets (Level
1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
September 30, 2008(in thousands)Marketable securities
$
          21
$
            --
$
            --
$
          21 Liabilities To estimate
the fair value of the swap liability on hedge contracts as of the measurement
date, the Company obtains inputs other than quoted prices that are observable
for the liability. Liabilities measured at fair value on a recurring basis are
summarized below. Quoted Prices in Active Markets for Identical Assets (Level
1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
September 30, 2008(in thousands)Swap
liability on hedge contracts
$
           --
$
           (84)
$
            --
$
       (84)   12    J. Foreign
Sales For the three
and nine months ended September 30, 2008 and 2007, foreign revenues to specific
countries were as follows: Three Months Ended
September 30,Foreign Revenues:
2008
2007(in thousands)China
$      1,644
$
        1,075Malaysia
1,497
852Mexico
678
313Thailand
508
453Canada
181
690All other foreign countries
1,266
1,408Total
foreign revenues
$
      5,774
$
        4,791   Nine Months Ended September 30,Foreign Revenues:
2008
2007(in thousands)Malaysia
$      4,793
$
        2,317China
4,208
2,938Thailand
1,556
1,808Mexico
1,519
1,659Canada
1,013
1,751All other foreign countries
3,794
3,727Total
foreign revenues
$
      16,883
$
      14,200   K. Discontinued Operations   In June 2007,
the Company finalized its sale of certain assets and liabilities of Lynch
Systems to a third party.  The assets sold under the Purchase Agreement, as
amended, included certain accounts receivable, inventory, machinery and
equipment. The Buyer also assumed certain liabilities of Lynch Systems,
including accounts payable, customer deposits and accrued warranties. The assets
retained by Lynch systems include the land, buildings and some equipment. The
Company intends to sell the land, buildings and remaining equipment in separate
transactions. As a result
of the sale of Lynch Systems, certain reclassifications of assets, liabilities,
revenues, costs, and expenses have been made to the prior period financial
statements to reflect the operations of Lynch Systems as discontinued
operations.  Specifically, we have reclassified the results of operations
of Lynch Systems for all periods presented to Loss from Discontinued
Operations within the Condensed Consolidated Statements of Operations.  In
addition, the remaining assets and liabilities of the business divested in 2007
have been reclassified to Assets of Discontinued Operations and Liabilities
of Discontinued Operations and the assets of the divested business held for
separate sale continue to be classified as held and used in accordance with SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets,and are included within Land and Buildings and Improvements. There were no
revenues from discontinued operations for the three months ended September 30,
2008 and 2007, respectively.  Income (loss) from discontinued operations
was $30,000 and ($153,000) for the three months ended September 30, 2008 and
2007, respectively.  13    Revenues
from discontinued operations were $0 and $2,534,000 for the nine months ended
September 30, 2008 and 2007, respectively.  Income (loss) from discontinued
operations was $25,000 and ($1,131,000) for the nine months ended September 30,
2008 and 2007, respectively.  L. Commitments
and Contingencies  In the normal
course of business, the Company and its subsidiaries may become defendants in
certain product liability, worker claims and other litigation.  The Company
and its subsidiaries have no litigation pending at this time.  M. Income
Taxes  The Company
files consolidated federal income tax returns, which includes all U.S.
subsidiaries.  The Company has a total net operating loss (NOL)
carry-forward of $5,378,000 as of December 31, 2007.  This NOL expires
through 2027 if not utilized prior to that date.  The Company has research
and development credit carry-forwards of approximately $743,000 at December 31,
2007 that can be used to reduce future income tax liabilities and expire
principally between 2020 and 2027.  In addition, the Company has foreign
tax credit carry-forwards of approximately $230,000 at December 31, 2007 that
are available to reduce future U.S. income tax liabilities subject to certain
limitations.  These foreign tax credit carry-forwards expire at various
times through 2017. The Company
provided $84,000 and $93,000 for foreign income taxes and $0 and $0 for state
taxes in the three month period ended September 30, 2008 and 2007, respectively.
 The Company provided $190,000 and $134,000 for foreign income taxes and $0
and $0 for state taxes in the nine month period ended September 30, 2008 and
2007, respectively. Due to the
uncertainty surrounding the realization of the favorable U.S. tax attributes in
future tax returns, we continue to record a full valuation allowance against our
otherwise recognizable U.S. net deferred tax assets as of September 30, 2008 and
December 31, 2007, except for the Companys $111,000 in AMT deferred tax assets
which do not expire. N. Related Party Transactions At September
30, 2008, the Company had $5,604,000 of cash and cash equivalents.  Of this
amount, $1,114,000 is invested in United States Treasury money market funds for
which affiliates of the Company serve as investment managers to the respective
funds, compared with $1,095,000 of $5,233,000 at December 31, 2007.   14    Item 2.
     Managements Discussion and Analysis of Financial
Condition and Results of Operations.  Forward Looking
Statements Information included or incorporated by reference in this
Quarterly Report on Form 10-Q may contain forward-looking statements. This
information may involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance or achievements to be materially
different than the future results, performance or achievements expressed or
implied by any forward-looking statements.  Forward-looking statements,
which involve assumptions and describe our future plans, strategies and
expectations, are generally identifiable by use of the words may, should,
expect, anticipate, estimate, believe, intend or project or the
negative of these words or other variations on these words or comparable
terminology.   Results of Operations  Three months ended September 30, 2008 compared to
three months ended September 30, 2007   Consolidated
Revenues and Gross Margin  Consolidated revenues from
continuing operations increased by $636,000, or 6.6%, to $10,248,000 for the
third quarter 2008 from $9,612,000 for the comparable period in 2007.  The
increase is due primarily to an increase in foreign sales of $983,000 over the
comparable period in 2007 offset by a decrease in domestic sales of $347,000.
 This growth in foreign sales is driven by the Companys customers
continuing migration of manufacturing into low labor cost regions.  Consolidated gross margin from
continuing operations as a percentage of revenues for the third quarter 2008
increased to 25.6% from 23.5% for the comparable period in 2007 reflecting the
Companys continuing efforts to improve upon its manufacturing and supply chain
efficiency.  Operating
Loss    Operating loss from continuing
operations of $93,000 for the third quarter 2008 is an improvement of $190,000
from the $283,000 operating loss for the comparable period in 2007.  The
$190,000 improvement was primarily driven by an improvement in gross margin of
2.1% in the third quarter of 2008 as a percentage of sales in comparison to the
same period in 2007 reflecting the Companys continuing efforts to improve upon
its manufacturing and supply chain efficiency.  The improvement in gross
margin was offset by an increase in engineering, selling and administrative
expenses of $169,000 in the third quarter of 2008 compared to the same period in
2007, which was primarily driven by an increase in engineering head count.  Other
Income (Expenses)  Net interest expense for the
third quarter 2008 was $79,000, compared with $79,000 for the comparable period
in 2007.  In the third quarter of 2008, the Company recognized $58,000 in
other expense, compared with other income of $15,000 for the comparable period
in 2007, offset by the gain on the sale of equipment not related to the
Companys frequency control and electronic filter businesses of $255,000 in the
third quarter of 2008.  Income
Taxes  The Company files consolidated
federal income tax returns, which includes all subsidiaries.  The income
tax provision for the three-month period ended September 30, 2008 included
foreign taxes.  The provision gives effect to our estimated tax liability
at the end of the year. Due to the uncertainty
surrounding the realization of the favorable U.S. tax attributes in future tax
returns, we continue to record a full valuation allowance against our otherwise
recognizable U.S. net deferred tax assets as of September 30, 2008 and December
31, 2007, except for the Companys $111,000 in AMT deferred tax assets which do
not expire.    15    Results
of Discontinued Operations  As a result of the sale of Lynch
Systems in the second quarter of 2007, we have reclassified the results of
operations of Lynch Systems for all periods presented to Discontinued
Operations within the Condensed Consolidated Statements of Operations, in
accordance with accounting principles generally accepted in the United States of
America.  For the quarter ended September
30, 2008, the revenues from discontinued operations were $0 and income from
discontinued operations was $30,000 compared with revenues of $0 and loss from
discontinued operations of $153,000 for the third quarter of 2007.  Net
Loss  Net loss for the third quarter
2008 was $29,000 compared to net loss of $593,000 for the comparable period in
2007. The third quarter 2008 loss was comprised of a $59,000 loss from
continuing operations and $30,000 income from discontinued operations compared
with a $440,000 loss from continuing operations and $153,000 loss from
discontinued operations for the third quarter of 2007. The decrease in net loss
is due to improved gross margins as a percentage of revenue of 2.1% and a
reduction in the loss from discontinued operations of income of $30,000 in the
third quarter of 2008 compared to a loss of $153,000 third quarter of 2007. In
addition, the Company recognized a gain on the sale of equipment of $255,000 in
the third quarter of 2008 compared to $0 in the same period in 2007. Nine months ended September 30, 2008 compared to
nine months ended September 30, 2007  Consolidated
Revenues and Gross Margin Consolidated revenues from
continuing operations for the nine-month period ending September 30, 2008
increased by $1,178,000, or 4.1%, to $30,181,000 from $29,003,000 for the
comparable period in 2007.  The increase is due primarily to an increase in
foreign sales of $2,683,000 over the comparable period in 2007 offset by a
decrease in domestic sales of $1,505,000.  This growth in foreign sales is
driven by the Companys customers continuing migration of manufacturing into
low labor cost regions. Consolidated gross margin from
continuing operations as a percentage of revenues for the nine-month period
ending September 30, 2008 increased to 26.0% from 23.3% for the comparable
period in 2007.  The improvement in gross margin reflects the Companys
continuing efforts to improve upon its manufacturing and supply chain
efficiency. Operating
Loss Operating loss from continuing
operations of $943,000 for the nine-month period ending September 30, 2008 is an
improvement of $1,008,000 from the $1,951,000 operating loss for the comparable
period in 2007.  The $1,008,000 improvement was caused by a margin
percentage improvement of 2.7%, resulting in additional gross margin of $783,000
on a same sales level reflecting the Companys continuing efforts to improve
upon its manufacturing inefficiencies experienced in 2007, offset by an increase
in professional fees primarily due to the Companys restatement of its financial
statements for the first two quarters of 2007, fiscal 2006 and prior years and
its continuing compliance requirements under Sarbanes-Oxley.  In addition,
in 2007 the Company recognized an impairment loss on Lynch Systems assets of
$905,000.  16    Other
Income (Expenses) Investment income from
continuing operations decreased $1,526,000 to $0 for the nine-month period ended
September 30, 2008.  This was due to the sale of substantially all of the
marketable securities that were held for sale during the first quarter 2007.
 Net interest expense for the nine-month period ended September 30, 2008
was $208,000, compared with $260,000 for the comparable period in 2007 due to
the overall reduction in Company debt in 2008 in relation to the comparable
period in 2007, as well as a reduction in the variable interest rate on
MtronPTIs revolving loan.  In addition, the Company recognized a gain on
the sale of equipment not related to the Companys frequency control and
electronic filter businesses of $255,000 in 2008 compared to a gain on the sale
of land of $88,000 during the comparable period in 2007. Income
Taxes The Company files consolidated
federal income tax returns, which includes all subsidiaries.  The income
tax provision for the nine-month period ended September 30, 2008 included
foreign taxes.  The provision gives effect to our estimated tax liability
at the end of the year. Due to the uncertainty
surrounding the realization of the favorable U.S. tax attributes in future tax
returns, we continue to record a full valuation allowance against our otherwise
recognizable U.S. net deferred tax assets as of September 30, 2008 and December
31, 2007, except for the Companys $111,000 in AMT deferred tax assets which do
not expire. Results
of Discontinued Operations As a result of the sale of Lynch
Systems in the second quarter of 2007, we have reclassified the results of
operations of Lynch Systems for all periods presented to Discontinued
Operations within the Condensed Consolidated Statements of Operations, in
accordance with accounting principles generally accepted in the United States of
America. For the nine-month period ended
September 30, 2008, the revenues from discontinued operations were $0 and income
from discontinued operations was $25,000 compared with revenues of $2,534,000
and loss from discontinued operations of $2,113,000 including a loss on the sale
of Lynch Systems of $982,000 for the comparable period in 2007. Net
Loss Net loss for the nine-month
period ended September 30, 2008 was $1,192,000 compared to a net loss of
$2,868,000 for the comparable period in 2007. The nine-month period ended
September 30, 2008 loss was comprised of a $1,217,000 loss from continuing
operations and $25,000 gain from discontinued operations compared with a
$755,000 loss from continuing operations and $2,113,000 loss from discontinued
operations for the comparable period in 2007. The decrease in net loss from 2007
to 2008 is due to the Company incurring an impairment loss on Lynch Systems
assets of $905,000 and total net loss from discontinued operations of
$2,113,000, offset by investment income of $1,526,000 for the nine-month period
ended September 30, 2007, compared to an impairment loss of $0, net income from
discontinued operations of $25,000 and investment income of $0 for the
comparable period in 2008.     Liquidity
and Capital Resources  The Companys cash, cash
equivalents and investments in marketable securities at September 30, 2008 was
$5,625,000 as compared to $5,281,000 at December 31, 2007.  MtronPTI had
unused borrowing capacity of $3,426,000 under MtronPTIs revolving line of
credit at September 30, 2008, as compared to $4,465,000 at December 31, 2007.
 At September 30, 2008, MtronPTI had $2,074,000 outstanding in its
revolving loan, compared with $1,035,000 at December 31, 2007.  At September 30, 2008, the
Companys net working capital was $10,032,000 as compared to $10,984,000 at
December 31, 2007 after taking into account the reclassification of Lynch
Systems assets into Assets or Liabilities of Discontinued Operations.  At
September 30, 2008, the Company had current assets of $17,595,000 and current  17    liabilities
of $7,563,000.   After taking into account the reclassification of
Lynch Systems assets into Assets or Liabilities of Discontinued Operations, at
December 31, 2007, the Company had current assets of $17,225,000 and current
liabilities of $6,241,000.  The ratio of current assets to current
liabilities was 2.33 to 1.00 at September 30, 2008, compared to 2.76 to 1.00 at
December 31, 2007.  Cash used in operating
activities from continuing operations was $264,000 for the nine months ended
September 30, 2008, compared to cash used in operating activities from
continuing operations of $707,000 for the nine months ended September 30, 2007.
 The decrease in cash used in operating activities is due to cash used in
the nine months ended September 30, 2007 to pay down accounts payable and
accrued liabilities of $785,000 compared to an increase of $288,000 for the nine
months ended September 30, 2008.  This was offset by usage of $547,000
during the nine months ended September 30, 2008 that increased inventory
balances compared to a decrease in inventory and cash creation of $1,048,000
during the comparable period in 2007.  Cash used in investing
activities from continuing operations was $29,000 for the nine months ended
September 30, 2008, versus cash provided by of $2,128,000 for the nine months
ended September 30, 2007.  The cash from investing activities came
primarily from the sale of securities in March 2007.  The proceeds of that
sale were $2,292,000.  Cash provided by financing
activities from continuing operations was $744,000 for the nine months ended
September 30, 2008, compared with cash used in financing activities of $781,000
for the nine months ended September 30, 2007.  The increase in cash
provided by financing activities is due primarily to an increase in net
borrowings on the Companys note payable offset by a decrease in scheduled
repayments of its long-term debt.  At September 30, 2008, total
liabilities of $11,457,000 was $950,000 more than the total liabilities at
December 31, 2007 of $10,507,000. The debt increased due to the increase in
MtronPTIs borrowing on its revolving loan, which was partially offset by a
decrease in term loans outstanding due to scheduled repayments.  At
September 30, 2008, the Company had $411,000 in current maturities of long-term
debt compared with $419,000 at December 31, 2007.  The increase in
consolidated debt was offset by an increase in cash and cash equivalents of
$371,000.  The Company believes that
existing cash and cash equivalents, cash generated from operations and available
borrowings on its revolver, will be sufficient to meet its ongoing working
capital and capital expenditure requirements for the foreseeable future.  On October 14, 2004, MtronPTI,
entered into the FNBO Loan Agreement.  The FNBO Loan Agreement provides for
a short-term credit facility of up to $5,500,000, the FNBO Revolving Loan.
 The provisions of the FNBO Revolving Loan were subsequently amended, most
recently on June 30, 2008.  The principal balance of the FNBO Revolving
Loan currently bears interest at 30-day LIBOR plus 2.1%, with interest only
payments due monthly and the final payment of principal and interest due on June
30, 2009.  At September 30, 2008, the amount outstanding under the
revolving credit loan was $2,074,000.  The Company had $3,426,000 of unused
borrowing capacity under its revolving line of credit at September 30, 2008,
compared to $4,465,000 at December 31, 2007. The FNBO Loan Agreement also
provides for a term loan in the original principal amount of $2,000,000, the
FNBO Term Loan.  The provisions of the FNBO Term Loan were subsequently
amended, most recently on January 24, 2008.  Under such amendment, the
original principal amount of the FNBO Term Loan is approximately $1,410,000, and
the principal balance bears interest at 30-day LIBOR plus 2.1%, with principal
and interest payments due monthly and the final payment of principal and
interest due January 24, 2013. The FNBO Loan Agreement contains
a variety of affirmative and negative covenants, including, but not limited to,
financial covenants that MtronPTI maintain: (i) tangible net worth of not less
than $7,000,000, (ii) a ratio of current assets to current liabilities of not
less than 1.5 to 1.0; (iii) a ratio of total liabilities to tangible net worth
of not greater than 2.75 to 1.0; and (iv) a fixed charge ratio of 1.2 to 1.0.
 At September 30, 2008, the Company was in compliance with these
covenants. All outstanding obligations
under the FNBO Loan Agreement are guaranteed by the Company. In connection with the FNBO Term
Loan, MtronPTI entered into a separate interest rate swap agreement with FNBO
from which it receives periodic payments at the LIBOR Base Rate and makes
periodic payments at a fixed rate of 5.60% through the life of the FNBO Term
Loan.  The Company has designated this swap as a cash flow  18    hedge
in accordance with FASB 133 Accounting for Derivative Instruments and Hedging
Activities.  The fair value of the interest rate swap at September 30,
2008 is $1,000 net of any tax effect, and is included in swap liability on
hedge contracts on the condensed consolidated balance sheets.  The change
in fair value is reflected in other comprehensive loss, net of any tax
effect. On September 30, 2005, MtronPTI
entered into the RBC Loan Agreement, which provides for a loan in the original
principal amount of $3,040,000, the RBC Term Loan.  The RBC Term Loan bears
interest at LIBOR Base Rate plus 2.75% and is being repaid in monthly
installments based on a 20 year amortization, with the then remaining principal
balance and interest due on the fifth anniversary of the RBC Loan Agreement.
 The RBC Loan Agreement contains a variety of affirmative and negative
covenants, including, but not limited to, financial covenants that MtronPTI
maintain: (i) a ratio of total liabilities to tangible net worth of at least 4.0
to 1.0; (ii) tangible net worth of at least $4.2 million; and (iii) a fixed
charge coverage ratio of not less than 1.2 to 1.0.  At September 30, 2008,
the Company was in compliance with these covenants. All outstanding obligations
under the RBC Loan Agreement are collateralized by security interests in the
assets of MtronPTI and guaranteed by the Company. In connection with the RBC Term
Loan, MtronPTI entered into a five-year interest rate swap from which it
receives periodic payments at the LIBOR Base Rate and makes periodic payments at
a fixed rate of 7.51% with monthly settlement and rate reset dates.  The
Company has designated this swap as a cash flow hedge in accordance with FASB
133 Accounting for Derivative Instruments and Hedging Activities.  The
fair value of the interest rate swap at September 30, 2008 is ($85,000) net of
any tax effect, and is included in swap liability on hedge contracts on the
condensed consolidated balance sheets.  The change in fair value is
reflected in other comprehensive loss, net of any tax effect.      Off-Balance Sheet Arrangements   The
Company does not have any off-balance sheet arrangements.           Item 3. Quantitative
and Qualitative Disclosures About Market Risk.  Not applicable.  Item 4T. Controls and Procedures.   Evaluation of our Disclosure
Controls and Procedures Under the supervision and with
the participation of our management, including our Chief Executive Officer and
Chief Financial Officer, we evaluated the effectiveness of the design and
operation of our disclosure controls and procedures (as defined under Exchange
Act Rule 13a-15(e)) as of September 30, 2008. Based on this evaluation,
management has concluded that as of September 30, 2008, such disclosure controls
and procedures were not effective. Changes in Internal Control
Over Financial Reporting The Companys management is
responsible for establishing and maintaining adequate internal control over
financial reporting.  Under the supervision and with the participation of
management, including our Chief Executive Officer and Chief Financial Officer,
management assessed the effectiveness of internal control over financial
reporting as of December 31, 2007 based on the guidance for smaller companies in
using the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) Internal Controls  Integrated Frameworkas it relates to the
effectiveness of internal control over financial reporting.  Based on that
assessment, management had concluded that the Companys internal controls over
financial reporting were not effective as of December 31, 2007 to provide
reasonable assurance regarding the reliability of its financial reporting and
the preparation of its financial statements for external purposes in accordance
with accounting principles generally accepted in the United States of America.
As a result of its assessment of our internal control over financial reporting,
management identified material weaknesses in the following areas: entity-level
controls, enterprise-wide risk oversight, financial statement close and
reporting process, inventory controls and information technology company-level
controls.  19    There
were no significant changes in our internal control over financial reporting
that occurred during the most recent fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting. Remediation Efforts to
Address Material Weaknesses in Internal Control over Financial Reporting Throughout the process to report
on the operations for the three months ended September 30, 2008, no material
changes in our internal control over financial reporting were made regarding the
implementation of a remediation plan to address the material weaknesses
identified as of December 31, 2007.  We have continued to implement
controls and procedures that have addressed and corrected the previously
reported control deficiency related to material weakness in internal control
over financial reporting with respect to inventory controls.  The primary
changes made by the Company to remedy the identified material weakness were
improvements in the documentation of implemented controls and procedures and
their respective reviews and approvals.   In addition, management
continuously identifies and communicates in a timely manner to the responsible
personnel across the Company changes to its compliance program and actively
follows up on its appropriate implementation. Management has continued to
identify a material weakness in the area of information technology company-level
controls. We will continue to implement
process changes to address the material weaknesses previously noted regarding
the internal controls over financial reporting for fiscal 2007. We are currently
undergoing a comprehensive effort to remedy the control deficiencies identified.
This effort, under the direction of the Companys senior management includes the
documentation, testing and review of our internal controls. During the course of
these activities, we may identify other potential improvements to our internal
controls over financial reporting that we will evaluate for possible future
implementation. We expect to continue such documentation, testing and review and
may identify other control deficiencies, possibly including additional material
weaknesses, and other potential improvements to our internal controls in the
future. Evaluation of Internal
Control Over Financial Reporting Based on managements continuing
assessment of the Companys internal control over financial reporting,
management has concluded that the Companys internal control over financial
reporting was not effective as of September 30, 2008 to provide reasonable
assurance regarding the reliability of its financial reporting and the
preparation of its financial statements for external purposes in accordance with
United States generally accepted accounting principles.    20    PART II OTHER
INFORMATION  Item 1. Legal Proceedings.   In the normal course of
business, the Company and its subsidiaries may become defendants in certain
product liability, worker claims and other litigation.  There is no
litigation pending currently. Item
1A. Risk
Factors. We found material
weaknesses in our internal control over financial reporting and concluded that
our disclosure controls and procedures and our internal control over financial
reporting were not effective as of December 31, 2007 and September 30,
2008. As disclosed in Part II, Item
9A(T), Controls and Procedures, of our Annual Report on Form 10-K for the year
ended December 31, 2007, and updated herein in Part I, Item 4T, Controls and
Procedures, of our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2008, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures and our internal control
over financial reporting were not effective as of December 31, 2007 and not
effective as of September 30, 2008.  Our failure to successfully implement
our plans to remediate the material weaknesses discovered could cause us to fail
to meet our reporting obligations, to produce timely and reliable financial
information, and to effectively prevent fraud.  Additionally, such failures
could cause investors to lose confidence in our reported financial information,
which could have a negative impact on our financial condition and stock
price.  Item 6. Exhibits.   EXHIBIT INDEX  Exhibit No.
Description31(a)*
Certification by Principal
Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31(b)*
Certification by Principal
Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32(a)*
Certification by Principal
Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.32(b)*
Certification by Principal
Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.   * filed herewith    The exhibits listed above have
been filed separately with the Securities and Exchange Commission in conjunction
with this Quarterly Report on Form 10-Q or have been incorporated by reference
into this Quarterly Report on Form 10-Q. Upon request, the Company will furnish
to each of its stockholders a copy of any such exhibit. Requests should be
addressed to the Office of the Secretary, The LGL Group, Inc., 2525 Shader Rd.,
Orlando, Florida 32804.   21    SIGNATURES   Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly
authorized.  THE LGL GROUP,
INC.Date:
           November
13, 2008

BY:
/s/ Robert ZylstraRobert ZylstraPresident and Chief Executive
Officer
(Principal Executive Officer)Date:
           November
13, 2008

BY:
/s/ Harold D. CastleHarold D. CastleChief Financial Officer
(Principal Financial Officer)